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SALT LAKE CITY — Utah Gov. Spencer Cox's record $29.5 billion proposed budget for the 2024 fiscal year would set aside $9.7 million to help support Utah families. The proposal could be expanded to benefit more families, advocates say.
While the proposal itself was a step in the right direction, Voices for Utah Children said it would require some leaps and bounds to truly support and elevate young families' current needs.
The budget allocated $4.7 million to expand Utah's child tax credit and $5 million for accessible child care.
The child tax credit
During the pandemic, the federal child tax credit was expanded as part of the American Rescue Plan and temporarily made refundable — granting families $300 per month per child under 6 and $250 per child aged 6 to 17. The expansion had a significant impact, reducing child poverty to its lowest recorded level in 2021, dropping by 46% from 9.7% in 2020 to 5.2% in 2021, according to data from the U.S. Census Bureau.
The federal expansion of the child tax credit helped lift 32,000 children from poverty in Utah, according to Voices for Utah Children. That impact prompted the Utah Legislature to become the 13th state to introduce its very own child tax credit in 2023.
Who is eligible under the 2023 bill
- This $1,000 tax credit is for children who are ages 1-3 on the last day of the claimant's taxable year; families will not be able to claim this credit until next year.
- There are household income requirements. Families with an income of up to $54,000 for a couple or $43,000 for a family with a single parent (also called head of household) can claim the credit.
- If a family makes more than a certain amount of money, they can still claim this tax credit, but it is phased out based on household income.
Under Utah's current child tax credit, Voices for Utah Children estimated that it only applies to 1.4% of families in Utah, helps 4.3% of Utah children and offers an average of $400 in savings. Utah's Child Tax Credit is nonrefundable. It can only be used to help reduce the amount of income taxes you owe but doesn't apply to any families whose income tax burden is zero.
"The way that it's structured you can ostensibly claim up to $1,000 a child, but because of the way it's structured, nobody can actually realize that full credit. You can only ever use it to offset the cost of your taxes," said Anna Thomas, Voices for Utah Children policy director. "The biggest problem we saw is that it cuts out all the lowest income families in Utah and that is probably the biggest oversight because those are the kids whose family need that financial boost, when their kids are little, more than anyone."
The governor's proposal
Cox's proposal would expand the credit for children to age 5, up from age 3. That would cover 3% of Utah families and 9.2% of children in Utah, with an average of $585 in tax savings.
As with the current credit, families with an income of $54,000 for a couple or $43,000 for a family with a single parent (also called head of household) can claim the credit. If a family makes more than a certain amount of money, they can still claim this tax credit, but it is phased out based on household income.
Voices for Utah Children suggests the state expand the credit to include newborns and ages 1-5, while also making the credit refundable. The expansion and making it refundable would reach 7.2% of Utah families, including 21.7% of children, with an average tax saving of $1,298.
The group wants the tax credit to be refundable because "we have to include as many people as possible and we have to target the most at-risk people first. There's a misunderstanding at the Legislature that all poor people access all government programs and that's simply not true," said Thomas.
"This would be a really important tool (offering) flexibility for supporting exactly that group of most vulnerable kids. And the arguments, the discussion are too much sometimes about the parent, or the parent doesn't pay income tax so they don't deserve to have a tax credit. But their kid is no less needy, their financial struggles are no less real," she added.
Thomas pointed to the Utah Legislature's recent contemplation of an income tax rate reduction that is estimated to cost the state $160 million. A recent analysis that Voices for Utah Children received from the Institute on Tax and Economic Policy stated that about two-thirds of the money will go to Utahns in the top 20% income bracket, while one-third will go to the other 80% of Utahns.
A similar analysis from the Institute on Tax and Economic Policy indicated that a fully refundable child tax credit, available to low- and middle-income families with children ages 0 to 5, would cost about $130 million.
"All of that money would go to Utah families raising young children who are surviving on tight budgets. Our position at Voices is, a targeted tax cut to support and elevate Utah's families with young children is a much better — and more popular — use of public funds than throwing millions of tax dollars back at Utah's richest people," Thomas said.
Correction: An earlier version stated the proposed budget was $28.4 billion, the correct number is $29.5 billion.
