Families adjusting after child tax credit program ends

This month is the first that 30 million families will go without the child tax credit checks they have received since last summer.

DALLAS - This month is the first that 30 million families will go without the child tax credit checks they have received since last summer.

Experts say the end of the checks will make things difficult for the parents who have come to rely on the money as part of their budget. But some economists believe the program was likely a contributing factor to inflation.

The lapse comes after congress failed to pass an extension for an expanded program.

"I worry about the future of my kids," said Diana Thompson, a single mother of a 14-year-old daughter and 9-year-old son.

The child tax credit was part of the Biden administration's American Rescue Plan passed in 2021. It provided as much as $300 per child every month to millions of Americans.

Thompson received $500 a month from July through December.

"Helped me pay the bills, give my kids a birthday," she said.

Thompson is a driver for the grocery delivery services Instacart and Point Pickup. She used some of the money for car repairs.

"If something happens to that engine, I don't have security to take care of it," she said.

SMU economist Mike Davis says the end of the program won’t slow down the economy overall, but it will hurt families who have come to rely on the money for the past six months.

"It's the starting and stopping that I find most worrisome," he said.

Davis says it is not clear if the benefit has contributed to the labor shortage.

"Evidence is fairly mixed about employment. There are some studies that show people work less if they can get this benefit, others say it provides support for mothers who want to return to the workplace and it becomes possible to afford better daycare," he said.

While the checks have helped many, Davis claims they also contributed to the price increases seen in recent months.

"This is a very big program, this ramp up in government spending really did lead to the inflationary problems we have now," he said.

Some lawmakers have argued the tax credit should continue for families below certain income thresholds. But Davis believes that too could cause problems.

"If you tie the child tax credit to income, then when people get raises they lose the tax credit. It amounts to enormous increase in tax bill. That creates a disincentive to work hard," he said.

Davis said stopping inflation is not as easy as the government flipping off the switch, so the end of the checks is not necessarily going to help dial back inflation.