Tax Savings from Child Tax Credit Vary Significantly from State to State

May 20, 2010

Download Fiscal Fact No. 228

Fiscal Fact No. 228

New IRS tax data by state for 2008 illustrate how much more the child tax credit 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
Child Tax Credit (CTC) by State, Tax Year 2008

State

Average Credit
(all returns)

Rank

Percentage of Returns Claiming Credit

Rank

Average Credit
(for returns claiming 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


Topics


Tags


About the Author


Related Research