Child loans have been available at the federal level since 1997. Before 2021, families could take advantage of $ 2,000 per child.

Under the American Freelance Plan, the credit was expanded to $3,000 for each child between the ages of 6 and 17, and $3,600 for children under 6.

“It changed in three very important ways under the American Rescue Plan,” said Aidan Davis, a public policy researcher with the Institute on Taxation and Economic Policy.

The maximum loan amount for most children was increased, and then eligibility was also expanded to include 17-year-olds for the first time, Davis said.

Another major change was making the loan fully repayable. Davis told HPR that they allowed low-income families to qualify for the full loan regardless of their income level.

The expansion of federal loans has led many states to consider local child loan policies. ITEP wants to know the impact of different credit rates on reducing child poverty in each state. The institute released its survey of 50 states in November.

For Hawai’i, the report concluded that an $1,800 loan would reduce child poverty by up to 25%. If the credit is $ 4,000, you can reduce it by 50%.

“The legislature could lift 23,000 children out of poverty, and benefit up to 91% of Hawai’i children,” Davis said.

“Then looking at the data we put together for Hawaiʻi, the options we’re proposing require investing anywhere from 1.3% to 5% of gross income State and local governments in Hawaiʻi.”

However, local household taxes are not included in the report.

“Hawaii already has at least four tax credits available to working parents,” said Nicole Woo, director of economic research and policy at Hawaiiʻi Children’s Action Network.

“On the one hand, we already have child loans here in Hawaiʻi. They’re just called something else.”

According to Woo, families can take advantage of the following credits: the food tax, child and dependent care, low income and renter, and the recent new home loan. .

“Last session, the state legislature improved the income tax credit in Hawaiʻi,” Woo said. “It will be more effective next year. In general, it will allow low-income parents to get the full amount of the loan. So it will be better for those who really need the especially tax debt.”

Although these credits are helping many local families, challenges remain in addressing child poverty. According to Woo, one is getting state lawmakers to agree to more spending on the debt. Another is raising the income requirement.

“One thing we’ve seen over the last 10 to 20 years is that fewer families are able to get these taxes at the state level, because they keep coming up against the income limits,” he said. Woo.

“Many of these limits have not been moved for a long time.”

Another factor that affects local families is the cost of living. Woo said it’s an ongoing crisis in the state, but passing a minimum wage in the last legislative session should help.

“The other side of the coin is how much people pay in tax. So the tax credit is also an important tool to help working parents keep more money in the wallet,” Woo said.

“It’s often an invisible tool for lawmakers.”

Woo told HPR that a few lawmakers may introduce child loan proposals in the next session. Although this may help the family, he believes that it may be better to consolidate the credit now to make it easier for the family to receive it.

He hopes there will be more discussion about helping low-income workers and families in the next hearing, which begins on January 18, 2022.



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