A Statement on Illinois’ new Child Tax Credit from Children’s Advocates for Change President Dr. Tasha Green Cruzat and Family Focus President Dara Munson
June 7, 2024
Illinois Governor J.B. Pritzker signed into law today HB 4951 that, along with other measures, creates a refundable state Child Tax Credit (CTC). Illinois is now the 15th state in the country to offer a state Child Tax Credit. The credit will be available to taxpayers eligible for the state Earned Income Tax Credit (EITC), which is 20% of the federal EITC, that have at least one child younger than age 12 in the household. The measure will provide tax relief to hundreds of thousands of Illinois taxpayers.
For this tax year (with taxes payable next year), the new state Child Tax Credit is worth 20% of a taxpayer’s state EITC. It then increases to 40% of a taxpayer’s state EITC for each of the following years. In cases where the credit amount exceeds what an individual owes in taxes, the state will refund that amount to the taxpayers. Between reductions in tax liabilities and actual refunds, the state estimates that the state Child Tax Credit will cost Illinois $50 million this tax year and then $100 million the following year.
Illinois Child Tax Credit Amount
The actual amount of the credit received by a taxpayer will vary depending on the household income range and number of children in the household. For tax year 2023, Illinois taxpayers were eligible for the state EITC if adjusted gross income was no more than $46,560 for a single tax filer with one child and $63,398 for married filing jointly tax filers with three or more children.
Based on 2023 numbers, the maximum state Child Tax Credit would have been $160 for a household with one child and $297 for a household with three or more children. (The federal government adjusts the EITC annually for inflation, but the credit would be worth approximately double these amounts in the following tax year.) While an increase in the federal EITC, from which the state EITC is calculated, accounts for an increase in the number of children in the household up to three, it is a per taxpayer credit and not a per child credit. This is true of the new state Child Tax Credit.
More work ahead
We appreciate the creation of the state Child Tax Credit and these levels of investment in a tight budget year. Even though the rate of inflation is now significantly lower than two years ago, many Illinois families still struggle with high rents and food prices. We also appreciate the continued increases in appropriations the Fiscal Year 2025 budget makes in home visiting, the Early Childhood Block Grant, and K-12 Education.
We also recognize the federal EITC is constructed in a pyramid fashion that gets to the maximum credit level only after reaching an income level of approximately $11,750 for a single tax filer with one child and $16,500 for married filing jointly taxpayers with three or more children. After remaining constant for an income range, the maximum credit begins to decline at higher income levels (around $27,750 for married filing jointly taxpayers with three or more children). By comparison, the Economic Policy Institute estimates a household of one adult and one child needs an annual income of nearly $79,000 to meet basic household needs and maintain an adequate standard of living.
There is still more work to be done to help working families, especially the very poor. Children’s Advocates for Change and Family Focus stand ready to work with our elected officials on additional economic assistance as well as new economic opportunities for Illinois families so that all can thrive.
