Fiscal Fact No. 228
New IRS taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. data by state for 2008 illustrate how much more the child tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. is worth to some states than others (see Table 1 below). The average tax return in Utah saved $342 by claiming the child tax credit while the average tax return in D.C. saved just over $100. By law, a taxpayer can claim a $1,000 credit for each dependent child under the age of 17.
The savings vary so much for two main reasons. First and most importantly, some states have families where there are simply more children. Historically, this is true in Hispanic homes and in the case of Utah, in families of the Mormon faith. Of course, children are also more likely to be present in families that are married, and therefore marriage rates are important. New York and D.C. are near the bottom because of their high rates of single households. Florida is near the bottom due to its high elderly population; for the most part, elderly Americans don’t have children under 17.
Another reason for the wide distribution is that the child tax credit begins to phase out for families making over $110,000. Therefore, high-income states are more likely to have the child tax credit taken away for families that do have children. So it is unsurprising that many high-income states (mostly in the Northeast) are at the bottom of the list.
At the end of this year, the child tax credit is scheduled to revert from $1,000 to $500 per child as part of the general expiration of the Bush tax cuts. If that happens, the states at the top of the list would be the biggest losers while those states at the bottom wouldn’t be affected much. However, most analysts consider it unlikely that Congress would allow the popular child credit to revert to $500.
Politically, one can see a red-blue split. States that benefit most from the child tax credit tend to lean Republican (red), while those states that lean Democrat (blue) are at the bottom of this list.
Note: Numbers here do not include the additional, or refundable, child tax credit. One effect of this is that the average child tax credit for returns claiming the credit (last two columns) is lowest for low-income states like Mississippi.
|
Table 1 |
||||||
|
State |
Average Credit |
Rank |
Percentage of Returns Claiming Credit |
Rank |
Average Credit |
Rank |
|
United States |
$212 |
17.5% |
$1,209 |
|||
|
Alabama |
$219 |
25 |
19.3% |
10 |
$1,134 |
45 |
|
Alaska |
$261 |
4 |
20.1% |
5 |
$1,301 |
13 |
|
Arizona |
$233 |
16 |
19.7% |
8 |
$1,187 |
36 |
|
Arkansas |
$220 |
24 |
19.1% |
12 |
$1,149 |
42 |
|
California |
$208 |
38 |
18.1% |
22 |
$1,147 |
44 |
|
Colorado |
$226 |
19 |
17.9% |
24 |
$1,264 |
21 |
|
Connecticut |
$197 |
44 |
15.8% |
44 |
$1,247 |
26 |
|
Delaware |
$216 |
30 |
17.8% |
25 |
$1,216 |
31 |
|
Florida |
$167 |
50 |
15.2% |
47 |
$1,097 |
49 |
|
Georgia |
$211 |
34 |
19.0% |
13 |
$1,111 |
47 |
|
Hawaii |
$212 |
33 |
16.8% |
37 |
$1,259 |
23 |
|
Idaho |
$265 |
2 |
20.2% |
4 |
$1,313 |
11 |
|
Illinois |
$217 |
29 |
17.5% |
29 |
$1,238 |
27 |
|
Indiana |
$245 |
8 |
19.0% |
14 |
$1,287 |
16 |
|
Iowa |
$254 |
6 |
18.5% |
21 |
$1,370 |
5 |
|
Kansas |
$253 |
7 |
19.2% |
11 |
$1,318 |
9 |
|
Kentucky |
$229 |
17 |
18.7% |
18 |
$1,226 |
30 |
|
Louisiana |
$226 |
18 |
19.7% |
6 |
$1,147 |
43 |
|
Maine |
$198 |
43 |
15.7% |
45 |
$1,256 |
24 |
|
Maryland |
$199 |
41 |
16.9% |
35 |
$1,178 |
38 |
|
Massachusetts |
$189 |
48 |
14.9% |
49 |
$1,270 |
20 |
|
Michigan |
$217 |
28 |
16.7% |
38 |
$1,301 |
12 |
|
Minnesota |
$236 |
12 |
17.4% |
32 |
$1,354 |
7 |
|
Mississippi |
$223 |
20 |
20.8% |
2 |
$1,074 |
50 |
|
Missouri |
$223 |
22 |
17.7% |
26 |
$1,255 |
25 |
|
Montana |
$199 |
40 |
15.4% |
46 |
$1,297 |
14 |
|
Nebraska |
$258 |
5 |
18.8% |
17 |
$1,370 |
4 |
|
Nevada |
$234 |
15 |
19.7% |
7 |
$1,188 |
35 |
|
New Hampshire |
$216 |
31 |
16.4% |
39 |
$1,316 |
10 |
|
New Jersey |
$192 |
47 |
16.1% |
42 |
$1,193 |
34 |
|
New Mexico |
$219 |
26 |
18.6% |
20 |
$1,176 |
40 |
|
New York |
$173 |
49 |
14.7% |
50 |
$1,183 |
37 |
|
North Carolina |
$214 |
32 |
18.9% |
16 |
$1,133 |
46 |
|
North Dakota |
$235 |
13 |
16.9% |
36 |
$1,395 |
3 |
|
Ohio |
$223 |
21 |
17.4% |
31 |
$1,281 |
17 |
|
Oklahoma |
$239 |
11 |
19.4% |
9 |
$1,230 |
29 |
|
Oregon |
$199 |
42 |
16.1% |
41 |
$1,236 |
28 |
|
Pennsylvania |
$206 |
39 |
16.1% |
40 |
$1,278 |
18 |
|
Rhode Island |
$193 |
46 |
15.9% |
43 |
$1,213 |
32 |
|
South Carolina |
$209 |
37 |
18.9% |
15 |
$1,105 |
48 |
|
South Dakota |
$239 |
10 |
17.5% |
30 |
$1,370 |
6 |
|
Tennessee |
$209 |
36 |
18.1% |
23 |
$1,159 |
41 |
|
Texas |
$244 |
9 |
20.7% |
3 |
$1,177 |
39 |
|
Utah |
$342 |
1 |
23.7% |
1 |
$1,445 |
1 |
|
Vermont |
$194 |
45 |
15.1% |
48 |
$1,287 |
15 |
|
Virginia |
$209 |
35 |
17.3% |
33 |
$1,211 |
33 |
|
Washington |
$222 |
23 |
17.6% |
28 |
$1,262 |
22 |
|
West Virginia |
$218 |
27 |
17.2% |
34 |
$1,271 |
19 |
|
Wisconsin |
$235 |
14 |
17.6% |
27 |
$1,335 |
8 |
|
Wyoming |
$262 |
3 |
18.6% |
19 |
$1,407 |
2 |
|
Dist. of Columbia |
$104 |
51 |
10.7% |
51 |
$973 |
51 |