Provide Supports for Children, Families, and Communities

States have flexibility in setting eligibility requirements, work requirements, time limits, application requirements and benefit amounts. They can use this flexibility to expand eligibility and benefits to additional families, with priority for those with very young children, those experiencing housing instability, and other families with traumatic situations, as well as to make it easier for families to participate in TANF and to receive child care and other supports while they are receiving cash assistance.

Maine and Maryland joined Illinois and the District of Columbia as states that have repealed full TANF family sanctions, which take away assistance for the entire family if the parent doesn’t meet work or other requirements. Only three other states – California, New York, and Vermont – don’t impose this penalty.

Washington and Indiana have modified policies to maintain TANF benefits for families when circumstances change, such as increase in the unemployment rate or in the family income up to a certain amount.

In 2023, New Mexico increased TANF cash assistance, while Indiana increased benefit amounts and raised the income eligibility levels for receiving TANF. Indiana also passed legislation allowing pregnant women who meet the income requirements to be eligible for TANF. Georgia expanded TANF eligibility to include pregnant women as well.  

Develop revenue-based strategies to enhance families’ financial resources.

States can use policies to support the economic security of families, by providing and increasing refundable earned income tax credits (EITCs) and dependent care tax credits, by creating wealth building trusts like “baby bonds,” and by reforming the state income tax system to decrease the burden on low-income families and eliminating the tax burden for families with young children.

In 2023, a number of states increased the earned income tax credit (Hawaii, Connecticut) or expanded eligibility for the credit (Maryland, Vermont).

Nebraska passed a package of tax credits that support families, providers, early childhood educators, and taxpayers who make qualifying contributions to early childhood education programs. $15 million of this package is dedicated to refundable tax credits for families who has one or more children in a licensed or license-exempt ECE program that participates in the subsidy system. Households with incomes below poverty are eligible for this credit.

In 2022, New Jersey and Vermont established child tax credits targeted to families with young children. New Jersey’s Young Child Tax Credit provides a refundable tax credit of up to $500 per year for families with children under the age of 5 and earning less than $80,000 per year. Vermont passed a refundable tax credit of $1,000 for the same age group for families earning below $125,000 per year. Other states that have created new child tax credits since 2022 include New Mexico, Minnesota, Oregon, and Utah.

In 2023, 18 states created new or improved upon their child tax credits. For example, New York expanded their child tax credit to include babies and toddlers, and Maryland broadened eligibility for their CTC by raising the income threshold. Maine made its dependent exemption tax credit refundable. Vermont expanded both the child tax credit and the EITC to cover residents without tax identification numbers and set up a system for advanced quarterly payments.

Connecticut and the District of Columbia both created trusts in which the state invests annually for each child in eligible lower-income families. Children can access funds in these trusts when they turn 18.

The New York Department of Taxation and Finance examined the experiences of those applying for earned income credits and made recommendations for improvements to the application process.