In 2021, federal spending on children reached its peak. However, a report suggests that this spending may decrease by $230 per child in 2024.

• Since the 2021 pandemic peak, research from the Urban Institute shows a "sharp decrease" in federal spending on children.
• The research predicts that in 2024, the expenditures on children will decrease by approximately $230 per child from the previous year.
• Congress may consider revising the child tax credit next year when it expires.

In 2021, federal spending on children reached a high of $11,690 per child due to the Covid-19 pandemic.

According to new research from the Urban Institute, the expenditures on education per child have seen a "steep decline" since then, falling from $10,190 in 2022 to $8,990 in 2023, after adjusting for inflation.

The research predicts that in 2024, the spending per child will decrease by approximately $230, from $8,990 to $8,760.

The report states that unprecedented new funding was provided to children and their families in 2020 and 2021 through federal legislation and state-level initiatives. This funding was used for tax provisions, social services, training, and housing programs.

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The temporary changes brought about by the pandemic had a significant impact on poverty, as stated by Heather Hahn, associate vice president at the Urban Institute and co-author of the report.

"Children experienced a sudden drop in poverty because they had more money, according to Hahn," said.

In 2021, child poverty decreased to 5.2% from 12.6% in 2019. However, the expiration of aid caused child poverty to rise back to 12.4% in 2022.

Between 2022 and 2023, the largest decrease in federal spending on children will be due to tax expenditures, while there will also be significant reductions in spending on nutrition, with more moderate changes in education funding, according to the Urban Institute.

Covid federal tax expansions were largest in 2021

In 2021, the largest tax expansions occurred during the pandemic era and involved direct payments to families.

The federal government issued three rounds of stimulus checks between March 2020 and March 2021, with larger maximum payments for families with children.

The third round of stimulus payments was the most generous, providing $1,400 per dependent, including those aged 17 and 18. To qualify, certain income thresholds and other restrictions applied.

In 2021, federal lawmakers temporarily increased the child tax credit to a maximum of $3,000 per child and $3,600 per child under age six, from the previous maximum of $2,000 per child.

The child tax credit was made non-refundable, enabling families with minimal income to obtain the full amount. However, like the stimulus checks, families had to fulfill certain income and other conditions to be eligible.

According to the Urban Institute, by 2023, the stimulus check money had largely been paid out and the child tax credit expenditures had decreased below pre-pandemic levels.

Child tax credit 'a central part of the discussion'

The Tax Cuts and Jobs Act may result in families receiving less money when it expires in 2025, unless Congress takes action beforehand. After 2025, the current child tax credit of up to $2,000 per child under age 17 will decrease to $1,000 per child under age 17.

Lawmakers may again consider making the child tax credit more generous.

The discussion of the federal tax policy deadline next year will center on the long-term future of the child tax credit and broader support for families and children, according to Garrett Watson, senior policy analyst at the Tax Foundation.

Watson stated that the expanded child tax credit, changes to the standard deduction, and repeal of the personal exemption are interrelated and will result in revenue neutrality.

Watson stated that generally, there is a bipartisan interest in maintaining the current policy, which includes the child tax credit that was established and expanded in 2017.

There is no agreement on how to modify the credit in the future, he stated.

During her presidential campaign, Vice President Kamala Harris proposed restoring the expanded child tax credit of up to $3,600 and offering $6,000 to families with newborns. In contrast, Republican vice-presidential candidate JD Vance stated his desire to increase the child tax credit to $5,000.

Generally, federal spending on children will have to compete with other priorities.

According to the Urban Institute, by 2034, federal expenditures on children as a percentage of GDP will decrease compared to current levels. This is due to the anticipated increase in spending on areas such as interest payments on the national debt and outlays to Social Security, Medicare, and Medicaid.

During the pandemic, the federal government temporarily took on a larger role in spending on children, according to Hahn.