President Joe Biden’s expanded federal child tax credit has the potential to help 278,000 children in Hawaii who could receive monthly payments of at least $250 throughout the last half of this year.

Starting in July, most families with children who have filed taxes and earn below a certain income threshold will start receiving monthly deposits in their bank accounts.

Families will receive $250 per month per child between the ages of 6 and 17, and $300 per month per child younger than 6 years old until the end of this year.

“This is really a good thing for families in Hawaii,” Beth Giesting, director of the Hawaii Budget and Policy Center, said. “We know alleviating poverty in children makes a lifetime of difference for those children.”

Volunteers unload fresh produce from boxes into bags to be distributed to 2500 Hawai'i residents arriving at the Aloha Stadium Monday, November 16, 2020. The free pop-up food distribution event was orgnanized by the Hawai'i Foodbank.
Volunteers unload fresh produce from boxes into bags to be distributed to 2,500 Hawai’i residents arriving at the Aloha Stadium in November. The free pop-up food distribution event was organized by the Hawaii Foodbank as hunger rose during the pandemic. Ronen Zilberman/Civil Beat/2020

People filing taxes individually can earn up to $75,000 before the credit starts to phase out. Married couples can earn up to $150,000 before the phase-out starts.

The monthly payments are slated to end in December, but families will receive the remaining half of the tax credit as part of next year’s tax refund.

The expanded, refundable tax credit has been hailed as a critical piece of Biden’s domestic policy agenda, and the president has said he will seek to make it permanent. The American Rescue Plan increased an existing child tax credit by at least 50% and made far more families eligible, particularly those in poverty, by enabling those without income to claim it.

Beth Giesting leads the Hawaii Budget and Policy Center. Beth Giesting

In Hawaii, the expansion allows 92,000 more children who weren’t eligible for the previous version of the tax credit to receive it. The federal funding could infuse an estimated $150 million into Hawaii’s economy and reduce child poverty.

“The newly signed advance tax credit bill will be a lifeline for residents of our island state because so many local families are struggling to make ends meet,” said Suzanne Skjold, chief operating officer at Aloha United Way. “An additional $250 or $300 per month could move a large percentage of Hawaii’s keiki out of poverty completely.”

The monthly cash payments reflect years of progressive advocacy for child allowances with no strings attached. Unlike some other social service programs, recipients don’t need to prove that they are working to receive the money. Stay-at-home parents can claim the credit as well as people who lost their jobs during the pandemic.

The monthly deposits will enable families to immediately spend the money on food, clothing or whatever they want.

In Hawaii, advocates say the money will be particularly helpful given the high cost of living and the large number of families living paycheck to paycheck. A report from Aloha United Way found 42% of Hawaii households struggled to make ends meet in 2018. The pandemic leveled another blow as unemployment and hunger shot up as COVID-19 disparities threw into sharp relief existing racial and ethnic socioeconomic inequities.

Giesting said that the tax credit will benefit communities of color, including Native Hawaiian, Samoan, Tongan and Marshallese communities that prior to the pandemic reported above-average poverty rates.

The vast majority of the Hawaii children eligible to receive the credit are from communities of color, with 87% of them non-white, according to the Center on Budget and Policy Priorities.

Giesting also noted the credit is expected to particularly help people who work in service industries such as cashiers, cooks, child care workers, food preparation workers and janitors.

Potential Barriers

Deborah Zysman from the Hawaii Children’s Action Network said she’s concerned that some Hawaii families might not receive the monthly payment if they don’t file taxes.

She wants Hawaii residents to know that they should do so even if they didn’t earn any money last year and didn’t owe anything because they can’t receive the monthly payments without filing.

Deborah Zysman leads the Hawaii Children’s Action Network. 

Undocumented families are also eligible for the money if their children have Social Security numbers, Zysman said. She urged families who need help filing taxes to call 866-698-9435 for free tax help.

The federal child tax credit is particularly salient in the wake of a Hawaii legislative session where many efforts to expand state government support for families failed.

Zysman noted that the Hawaii Legislature cut funding for child care and didn’t pass bills that would have expanded free preschool and mandated paid family leave. The silver lining, she said, was that thanks to federal funds, the state avoided huge cuts to social services.

Khara Jabola-Carolus, director of the Hawaii State Commission on the Status of Women, said she’s happy to see the policy normalizes child benefits.

But she noted that $250 or $300 per child each month won’t go as far in Hawaii. The Economic Policy Institute says that Hawaii is the 12th most expensive state for child care, including the District of Columbia.

Families of infants on average pay $13,731 per year for child care in Hawaii, one of many states where the average cost of child care is more expensive than college.

Still, Jabola-Carolus said the expanded tax credit is a huge step forward.

“The U.S. is turning a major corner on how it approaches women and caregiving,” she said.

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