May 20, 2010 Tax Savings from Child Tax Credit Vary Significantly from State to State Gerald Prante Gerald Prante Print this page Subscribe Support our work 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 Center for Federal Tax Policy Data Individual and Consumption Taxes Individual Income and Payroll Taxes Individual Tax Expenditures, Credits, and Deductions Research Tags George W. Bush Putting a Face on America's Tax Returns
