Illinois Child Tax Credit Offers $300 For Families With Kids Under 12

SPRINGFIELD, IL — Illinois taxpayers with young children are set to keep several hundred additional dollars under a new tax credit passed by lawmakers last week.

The $53.1 billion budget for the fiscal year starting next month includes $50 million for the creation of the state's first-ever child tax credit.

Targeted to low- and middle-income families with children under the age of 12, the new credit is available to individual taxpayers with incomes below $50,000 or joint filers with annual incomes below $75,000.

It offers eligible households an increase of 20 percent to the Earned Income Tax Credit, or EITC, rising to 40 percent in the program's second year. After the first year of the program, the total tax credit available to EITC-eligible families with children under 12 will rise to $100 million.

“One of the challenges facing families across America has been affordability, especially for those trying to raise a family," Gov. J.B. Pritzker said at a news conference following the passage of the budget.

"Rising prices have hit working families the hardest, so we focused on finding ways to reduce costs and put more money in their pockets," Pritzker said. "That’s why we eliminated the state sales tax on groceries and then created the first-ever Illinois Child Tax Credit, providing as much as $300 for working-class and middle-class families."

Illinois is set to become the 15th state to enact a state income tax credit for families with children, once Pritzker signs the budget, which passed the House with the minimum 60 votes needed following a marathon session that lasted into the early morning.

As passed, the budget also scraps the 1 percent state grocery tax, while allowing municipalities to impose their own grocery taxes.

The funding for the $100 million-per-year child tax credit comes in part from a tax increase of video gambling and sports betting. The tax on casino sportsbooks rises from 15 percent to up to 40 percent.

Recent history shows how effective a child tax credit can be, State Rep. Marcus Evans (D-Chicago) said in an editorial earlier this year.

"When the federal government enacted a national child tax credit during the COVID-19 pandemic, it cut child poverty in half," he said." Unfortunately, after that policy was not renewed in 2022, poverty figures for children have continued to rise."

A study published in January by researchers from the Illinois Economic Policy Institute, Dominican University and the University of Illinois at Urbana-Champaign examined the effects of a $300-per-child tax breaks for joint filers making up to $75,000 and single filers making up to $50,000.

Such a child tax credit, or CTC, would lower taxes for 840,000 households with 1.8 million children, according to the 42-page study, which also projected what would happen under more generous scenarios.

"The smaller credit would be expected to lift 13,900 children out of poverty in Illinois, reducing childhood poverty by 3 percent," it said. "This CTC structure would increase sales at Illinois businesses by $636 million and save or create 3,300 total jobs."