A large number of suburban parents in Illinois who are eligible will gain from the state’s first child tax credit included in the upcoming state budget. This plan aims to offer significant financial aid to families with young children.

Eligibility and Benefits

The new child tax credit is aimed at parents of children aged 12 and younger who are also eligible for the state’s Earned Income Tax Credit (EIT). Eligible parents can get as much as $300 for one child, with larger refunds available for those with more than one child. The tax credit is tiered, much like the EITC.

State Rep. Mary Beth Canty, a Democrat from Arlington Heights was instrumental in advocating for the child tax credit law in Springfield. She highlighted why this move is important, stating it could be crucial in families managing costs such as school supplies, diapers, new shoes and other necessities that keep families financial stable and children set up for future success.

So, Who Qualifies?

To apply for this new child tax credit, parents must meet certain income stipulations. Parents having at least one child aged 12 or younger should report less than $53,120 in yearly earnings on their joint tax return. Single filers with one qualifying child must report earnings under $46,560 annually. This scheme is designed to help low and moderate-income households by easing fiscal stress.

In 2022, data showed that 13% of all individuals filing income taxes in Illinois received earned income tax credits to lower their taxes burden if they were low or moderate-income earners. In Cook County alone 14% of all reported incomes qualified. A figure which was slightly lower in surrounding counties (DuPage County reporting 7%, Kane and Will 10%, Lake County 9%, and McHenry County 8%). What this suggests is that most suburban families may not qualify for the child tax credit.

Funds and Future Increases

For its first year, the state has set aside $50 million to provide child tax credit refunds. In future years, this will be raised to $100 million. This funding is generated by a rise in tax rates on gambling, according to state officials.

The Center for Tax and Budget Accountability, a Chicago based nonpartisan government finance research group, has been advocating for a statewide child tax credit linked with EITC. Their analysis in 2022 confirmed the effectiveness of this kind of policy as it helps redress taxes such as sales, excise, and property taxes that disproportionately affect lower income earners.

Legislative Development and Social Impact

In February, Governor J.B. Pritzker proposed spending $12 million on a similar child tax credit for parents of children aged three or less but legislators decided to increase funding and widen the age range resulting in this initiative.

Several social service agencies played an important role in securing this benefit in the next financial year’s budget. These organizations recognize the substantial impact of providing federal child tax credits during Covid19 periods view the state level policy as critical progress.

This will fundamentally aim at covering parents of children under 18 although currently capped at age 12 to offer immediate relief. Following such provisions he added “Every dollar refunded will result in $2.50 being spent”.

Bigger Impact and What Does the Future Look Like?

Based on recent data from the National Conference of State Legislatures, Illinois is now amongst 15 other states providing child tax credits to parents. There are about 1.9 million children, aged 12 or less in Illinois, with around 40% located in Cook County alone and another 26% living in surrounding counties.

The budget was approved by the General Assembly last week and is pending the governor’s signature. Once enforced it will offer a huge relief to many families enabling them to better cater to their children’s requirements.

Conclusion

The new child tax credit law marks considerable progress for Illinois supporting families rearing young children. It may not be perfect, but it successfully addresses immediate necessities of lots of low- and moderate-income households by offering vital financial support. As this program expands and evolves it holds promise for lifting more families out of the poverty trap thus boosting State Economic growth. The new budget invests not only on the future generation but also paves way for a fairer tax system within the state.