State-Level Child Tax Credits are Having a Moment in the Sun: Will Massachusetts Families be Left in the Dark?

In state legislatures around the nation, refundable child and family tax credits are experiencing a moment in the sun. Recent evidence shows that refundable child tax credits help families meet basic expenses and reduce poverty. At least 9 states have created or expanded child tax credits in 2023. Massachusetts families with children and adult dependents are struggling with the high cost of living in our state. Putting cash in the hands of families with children and adult dependents is a simple, effective way to help our fellow Bay Staters move from surviving to thriving.

The Massachusetts legislature is considering creating the Child and Family Tax Credit (CFTC), a refundable tax credit for families with children and adult dependents. The legislature is debating two competing CFTC proposals, one of which would provide a per-dependent benefit nearly twice as large as the other. It is important for our elected officials to choose the more generous option, as many of our neighbors’ household budgets strain under the weight of an affordability crisis. Minnesota, Colorado, New Jersey, and Oregon just enacted refundable child tax credits more generous than either of the proposals Massachusetts legislators are considering. May the bold action of these four states inspire our legislators as they finish debating the tax package in conference committee.

The Choice

The Massachusetts legislature is debating two competing proposals to create the Child and Family Tax Credit (CFTC), a refundable tax credit for families with children and adult dependents. The new CFTC would combine two existing smaller refundable credits, which families must currently choose between, and remove the cap on the number of eligible dependents. The Senate proposal would create a $310 credit for each qualifying dependent and would not index the credit amount to inflation. The House proposal would ramp up the size of the credit to $600 per dependent over three years and index the credit amount to inflation, ensuring the credit retains its value into the future. If enacted, the CFTC would support over 700,000 taxpayers and 1,000,000 dependents.

Leaning in to Generosity

Table 1 shows that 9 states have created or expanded their child tax credit so far this year. Four states passed child tax credits of $1,000 or more per dependent in 2023. While Utah’s credit is $1,000, it is not refundable, meaning that many families will not be able to access cash from the credit. Minnesota passed the most generous state-level CTC, with a maximum benefit of $1,750 per dependent that is indexed to inflation. Minnesota’s cost of living is less than that of Massachusetts, so Minnesota’s credit will go even further for low-income families.

State Child Tax Credit Changes, 2023
StateMaximum Per- Dependent AmountMax AgeRefundable?
Over $1,000
Minnesota$1,75017Yes
Colorado$1,2006Yes
New Jersey$1,0006Yes
Oregon$1,0006Yes
Utah$1,0003No
Under $1,000
New Mexico$60018/23Yes
Maryland$5006Yes
Maine$30017Yes
New York$30016Yes
Massachusetts (under negotiation)$310 to $60012Yes

Massachusetts legislators are debating a credit smaller than Minnesota’s, but we can choose a credit the size of New Mexico’s. The more generous proposal of $600 per dependent, indexed to inflation, would go the extra mile to help families. The additional $290 per dependent could help make rent, buy school or medical supplies, or pay fees for sports or summer camps, for instance. A family with two children and an adult dependent would receive an additional $870 in refundable credits compared to the less generous plan.

Credit Under Current Law and Proposals (Mass.)
DependentsMaximum Current Credits$310 Proposal$600 Proposal
One$240$310$600
Two$480$620$1,200
Three$480$930$1,800
Four$480$1,240$2,400

Latest

K-12 Funding Analysis by District: Challenges of Recent Inflation Limiting Investments From the Student Opportunity Act

The 2019 Student Opportunity Act (SOA) intended to make state funding in K-12 schools more robust and equitable. The following analysis examines the SOA’s impact ...
Read More →

Pre-Conference Analysis: With Fair Share Revenue Surpassing Expectations, More Money Could Go to Education and Transportation in House and Senate Compromise

Going into this year's Conference Committee, one major story is that revenue collection from the Fair Share "millionaire's tax" is much higher than originally projected. ...
Read More →

32% of Children Live in Cost-Burdened Households: MassBudget Urges Lawmakers to Focus on Affordability

Massachusetts ranks second in child well-being nationally, according to the 2024 KIDS COUNT® Data Book. However, high housing costs relative to family income continue to ...
Read More →
Scroll to Top

Get news from Massachusetts Budget and Policy Center in your inbox.