Rising Costs for Arizona Families Highlight That Now Is the Time for Expanded Child Tax Credit

The U.S. Census Bureau recently released 2023 one-year data from the Current Population Survey and American Community Survey. National and state-level data from these surveys provide the most current view on economic well-being measures like poverty, income, and housing cost burden.  

The data tells us Arizona families are facing significantly high costs of living, and the time is now for an expanded and enhanced Child Tax Credit.  

Poverty and income data show minor improvements, yet housing cost burden numbers are drastically higher

Census data provides two poverty measurements: the official poverty measure (OPM) and the supplemental poverty measure (SPM). The OPM shows that poverty levels declined from 13.5 percent to 12.4 percent overall in Arizona. Of all race and ethnicity groups, only Latino householders saw a statistically significant decline in poverty, down to 16 percent from 18.4 percent in 2019. 

Child poverty levels remained the same or slightly declined compared to pre-pandemic levels in Arizona. This is true even when zooming in on children by race and ethnicity. Yet, poverty levels remain significantly high for American Indian, Black, and Latino children.  Roughly one out of every three American Indian children, one out of every four Black children, and one out of every five Latino children live in poverty. Overall, one out of every six children in Arizona are experiencing poverty. 

Real median income data for Arizona households by race and ethnicity reveal a similar picture. Arizona households overall saw median incomes increase 4 percent to $77,315 compared to $74,192 in 2019. Latino households experienced an even higher increase of almost 12 percent, from $63,439 to $70,990. Only 2023 real median incomes for Asian and White households at $104,805 and $81,954 are above the $79,144 median living wage for a parent with one child without access to any resources. Even with access to resources like child care or employer-provided healthcare, this one-parent, one-child household would still need a median living wage of $74,235 or $73,590, respectively.  

While poverty and income data reveal a slight improvement, the share of renters in Arizona who are housing cost-burdened is much higher compared to pre-pandemic levels. Households are considered cost-burdened when they spend 30 percent or more of their income on rent. In 2023, 54 percent of renters in Arizona reported being housing-cost-burdened, compared to 46.5 percent in 2019.  

With rent taking up a much larger share of the income of more than one out of every two renters in Arizona, modest improvements in income are not enough to cover rent and other rising costs. This is especially true for families with the lowest incomes in Arizona and across the country. Arizona is also one of five states where more than 40 percent of middle-income renters spend 30 percent or more of their income on rent.  

Higher housing cost pressures for Arizonans are the result of housing supply and affordability issues that require solutions.  

An expanded national Child Tax Credit can further reduce poverty and help families afford rent

While housing cost solutions are urgently needed, they are not being implemented at a speed or scale that meets the moment. Policy solutions like an expanded national Child Tax Credit can have a more immediate impact and help relieve housing cost pressures for Arizona families in the meantime. We also know that an expanded Child Tax Credit can significantly reduce child poverty.  

The SPM anchored to either a 2022 or 2023 threshold shows overall poverty and child poverty remain lower than pre-pandemic levels. Unlike the OPM, the SPM accounts for the effect of programs such as the Child Tax Credit on poverty. The temporary Child Tax Credit expansion under the American Rescue Plan Act played a major role in the historically large one-year drop in child poverty measured by the SPM in 2021. When other pandemic-expanded programs and temporary Child Tax Credit expired in 2022, child poverty doubled.  

There have been several efforts to expand the Child Tax Credit in the last year. The 2023 American Family Act, for example, would have expanded the Child Tax Credit to American Rescue Plan Act levels but with a higher credit for newborns. According to analysis from the Center on Poverty and Social Policy at Columbia University, had the 2023 American Family Act been in effect in 2023, child poverty could have been 8.6 percent instead of 13.8 percent in the newly released SPM data. This represents children who could have had greater financial resources for food, a roof over their heads, and other essential services. 

Today, 477,000 Arizona children under 17 years old are either not eligible or receive a partial, rather than the full $2,000, Child Tax Credit under current law due to their families’ incomes being too low. Broken down by race and ethnicity: 278,000 Latino, 102,000 White, 64,000 Native American, 28,000 Black and 5,000 Asian children live in families that either receive partial credit or no credit because the current tax credit law leaves many low-income families behind. 

If Congress were to expand the Child Tax Credit to the 2021 American Rescue Plan Act levels, these 477,000 Arizona children living in families with the lowest incomes could be eligible or receive full credit. Furthermore, about 69,000 children in Arizona would be lifted above the poverty line. This would also mean 1,418,000 Arizona children would receive income boosts to help their families keep up with cost pressures such as housing, food, and child care. 

Congress should allow certain tax cuts to expire to fund an expanded Child Tax Credit

Next year, Congress will have to determine whether to continue, adjust, or allow to expire a series of tax cuts that were passed as part of the Tax Cuts and Jobs Act of 2017. Many of these tax cuts have primarily benefited households with higher incomes while at the same time increasing the country’s deficit. Congress should pass tax policies that are fiscally responsible and allow all families to thrive. By repealing tax cuts that primarily benefit only the wealthiest, we can pass evidence-based tax policies that help children and families.  

The Child Tax Credit is proven to reduce childhood poverty, and an expansion of the credit will pay dividends in the future in better health and educational attainment outcomes for those children it raises out of poverty. Furthermore, newly released U.S. Census data tells us that an expanded Child Tax Credit would bolster more Arizona families with children to keep up with higher cost of living pressures such as rent. 

In Arizona, 477,000 children need us to act now.