Effects of the 2021 Expanded Child Tax Credit on Adults’ Mental Health — Health Affairs (2023)

Summary

A paper by Akansha Batra, MA, Kaitlyn Jackson, MPH, and Rita Hamad, MD, PhD, published in Health Affairs, 42(1), 2023, on the 2021 expansion of the Child Tax Credit. The abstract states that the credit provided up to $3,600 per child in July-December 2021, where it formerly provided $2,000 per child. Using the Household Pulse Survey (N = 812,314) and a quasi-experimental study design, the authors examined effects on mental health among low-income adults with children. They report fewer depressive and anxiety symptoms among low-income adults and no changes in mental healthcare utilization.

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UCSF
UC San Francisco Previously Published Works

Title
Effects Of The 2021 Expanded Child Tax Credit On Adults’ Mental Health: A Quasi-
Experimental Study

Permalink
https://escholarship.org/uc/item/6qw93141

Journal
Health Affairs, 42(1)

ISSN
0278-2715

Authors
Batra, Akansha
Jackson, Kaitlyn
Hamad, Rita

Publication Date
2023

DOI
10.1377/hlthaff.2022.00733

Peer reviewed

eScholarship.org Powered by the California Digital Library
University of California
HHS Public Access
Author manuscript
Health Aff (Millwood). Author manuscript; available in PMC 2023 April 11.

Author Manuscript
Published in final edited form as:
Health Aff (Millwood). 2023 January ; 42(1): 74–82. doi:10.1377/hlthaff.2022.00733.

Effects of the 2021 Expanded Child Tax Credit on Adults’ Mental
Health: A Quasi-Experimental Study
Akansha Batra, MA1, Kaitlyn Jackson, MPH1, Rita Hamad, MD, PhD1
1University of California San Francisco, San Francisco, CA

Abstract

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The U.S. Congress temporarily expanded the Child Tax Credit (CTC) during the COVID-19
pandemic to provide economic assistance for families with children. While formerly the CTC
provided $2,000 per child for mostly middle-income parents, in July-December 2021 it provided
up to $3,600 per child. Eligibility criteria were also expanded to reach more economically
disadvantaged families. There has been little research evaluating the effect of the policy
expansion on mental health. Using the Census Household Pulse Survey (N = 812,314) and a
quasi-experimental study design, we examined effects on mental health and related outcomes
among low-income adults with children and racial/ethnic subgroups. We found fewer depressive
and anxiety symptoms among low-income adults. Black adults demonstrated greater reductions in
depressive symptoms compared with White adults, and adults of Black, Hispanic and other racial/
ethnic backgrounds demonstrated greater reductions in anxiety symptoms. There were no changes
in mental healthcare utilization. These findings are important for Congress and state legislators

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to weigh as they consider making the CTC and other similar tax credits permanent to support
economically disadvantaged families.

INTRODUCTION
During the COVID-19 pandemic, there was a rapid rise in anxiety and depressive symptoms,
disproportionately impacting economically disadvantaged families and people of color.(1) In
June 2020, 37.8% of White adults reported adverse mental or behavioral health symptoms
compared with 44.2% among Black adults and 52.1% among Hispanic adults.(2) Racial/
ethnic minority groups were at increased risk of chronic stress in the pandemic as they were
more likely to experience financial hardships and exacerbations of longstanding inequities
in income, housing, and other social determinants of mental health.(3–7) Since poverty

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and financial hardship are major risk factors for stress and mental health problems, it is
imperative to identify population-level polices to improve mental wellbeing among at-risk
groups. Economic policies have the potential to affect mental health by addressing the

Correspondence to: Rita Hamad, MD, PhD, Associate Professor in Residence, Philip R. Lee Institute for Health Policy Studies,
Department of Family & Community Medicine, rita.hamad@ucsf.edu.
Publisher's Disclaimer: This is the pre-publication version of a manuscript that has been accepted for publication. This version does
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Batra et al. Page 2

social determinants of mental health like poverty, food insecurity, and healthcare access (see

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conceptual diagram, Exhibit 1).(8–10) These mechanisms and mental health itself can then
affect physical health in the long run.(11)

In response to the financial hardship caused by the pandemic, in July 2021 the U.S.
government expanded the Child Tax Credit (CTC), an economic support program for
families with children, as part of the American Rescue Plan Act.(12, 13) The CTC was
established in 1997 to provide financial relief for middle-income families. While formerly
the CTC provided up to $2,000 per child, as part of the temporary 2021 expansion it
provided a maximum of $3,600 per child; it was also made fully refundable to low-income
and unemployed parents. Additionally, instead of being transferred in the form of an annual
tax refund, in 2021 it was disbursed as monthly advance payments that were automatically
transferred into the bank accounts of eligible families who had filed taxes in 2019 or 2020.
Prior to the CTC expansion, the credit was not fully refundable, i.e., one third of American

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children did not receive the full value of the benefit because their families did not earn
enough.(14) Children with single parents, those living in rural areas, Black and Hispanic
children, and those in larger families were disproportionally ineligible.(14, 15) In contrast,
about 90% of children were eligible for the expanded CTC, which was fully refundable, and
benefits were larger for lower-income families.

There has been limited work examining the effects of the expanded CTC, with studies
suggesting it reduced child poverty by nearly half, and reduced material hardship and food
insufficiency.(16–21) There are no studies to our knowledge on its mental health effects.
There is, however, existing evidence on another major poverty alleviation program for
low-income families with children, the Earned Income Tax Credit (EITC), showing the
potential promise of poverty alleviation programs more generally. For example, the EITC

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has been shown to improve family income, housing, and access to health insurance, and
to improve stress and mental health.(22–29) Studies suggest that the EITC’s benefits have
particularly benefited Black families.(8, 30) Yet the EITC is disbursed as an annual refund
rather than monthly payments, and individuals must work to receive it, so EITC studies do
not necessarily generalize to the potential impacts of the CTC, with its monthly payments
and near-universality (including broader coverage of immigrant families).

This study addresses this critical gap by examining whether the 2021 CTC expansion
improved mental health among adults with children, and specifically for low-income
individuals and racial/ethnic minorities. Because of historical marginalization and structural
racism, these groups have less wealth and lower income on average than higher-income
and White individuals and therefore may have benefited more from this new source of

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income. The expanded CTC expired at the end of 2021, and Congress continues to debate
whether to make the expansion permanent, while state governments consider their own
similar programs.(31) Evidence is therefore urgently needed to inform such conversations.

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METHODS

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Sample
The sample was drawn from the U.S. Census Household Pulse Survey (HPS), a nationally
representative repeated cross-sectional internet survey that began in April 2020 and
continues weekly through the present.(32) The Census Bureau randomly selects HPS
participants, who then complete an internet-based survey. We used data from waves 28–41
(April 14, 2021 to January 10, 2022) (N=944,189). Since the first monthly payment for
the expanded CTC was made on July 15, 2021 (just before wave 34) and the last payment
was made on December 15, 2022 (during wave 41), this provides 6 waves of pre-policy
and 7 waves of post-policy data. Of note, a final larger lump-sum CTC payment was made
during the spring of 2022 to those who filed taxes or claimed economic impact payments;
our approach excluded observations during this period because of the ambiguity regarding

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defining the exposure period and potential recipients. Finally, we restricted the sample
to respondents who provided responses on the mental health outcomes of interest (N =
812,314).

Exposure
CTC-eligible individuals with children under 18 whose interviews occurred during July-
December 2021 were considered “exposed” to the expanded CTC. Furthermore, those with
lower incomes were considered to have received the strongest exposure, since their benefits
were larger than those with higher incomes.

In particular, the 2021 expansion increased CTC benefits from a maximum of $2,000 to a
maximum of $3,600 per child for children under age 6 years, and up to $3,000 per child
age 6–17. Instead of being disbursed as part of an annual tax refund, the payment mode

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was changed to monthly advance payments. The full credit was available to single filers,
heads of household, and married couples filing jointly with modified adjusted gross incomes
under $75,000, $112,500, and $150,000, respectively, for the 2021 tax year. This included
those with zero earned income. The credit was phased out when income exceeded these
thresholds. The first phase-out occurred when income exceeded these thresholds but was
below $400,000 (married filing jointly) or $200,000 (all other filing statuses). The total
credit per child was reduced by $50 for each $1,000 (or a fraction thereof). The credit
would not be reduced below $2,000 under this phase-out. The second phase-out applied to
taxpayers with income more than $400,000 (married filing jointly) or $200,000 (other filing
statuses). In this phase-out, the total credit per child was reduced $50 for each $1,000, and
the credit could drop below $2,000 until it reached $0. Prior to the 2021 expansion, the CTC
was not available to those with earnings below $2,500, and those with lower incomes did

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not earn enough to qualify for the full amount (i.e., it was not fully refundable). Because
of these changes to eligibility criteria, 88% of American families with children (39 million
households) were eligible to receive payments beginning July 15, 2021.(33)

In this analysis, we assumed that eligible people received the credit (an approach similar
to prior studies of the EITC and other safety net programs where administrative data on
benefit receipt is unavailable).(8, 24, 25, 34) Notably, 65.4% of our sample who seemed

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eligible based on their self-reported demographic characteristics reported that they received

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the CTC, which indicates that our approach may involve some degree of measurement
error. Notably, prior work has indicated that self-reported receipt of safety net benefits is
unreliable; this may especially be the case if individuals were not aware of the automatic
deposits into their bank accounts.(35)

Outcomes
We included several mental health outcomes measured in the HPS. First, depressive
symptoms were captured using the two-item Patient Health Questionnaire (PHQ-2). In the
PHQ-2, respondents are asked how often they have been bothered by 1) having little interest
or pleasure in doing things and 2) feeling down, depressed, or hopeless. Answers range from
“not at all” to “nearly every day.” The two items are typically combined, and scores ≥3
indicate high risk of depression.(36)

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Second, the two-item Generalized Anxiety Disorder (GAD-2) scale is a brief screening
tool for generalized anxiety disorder. Individuals are asked if they are 1) feeling nervous,
anxious, or on edge, and 2) not able to control or stop worrying in the past two weeks; and
again how often they experience these symptoms.(37) A GAD-2 score ≥3 is considered high
risk for anxiety.

We also included two binary outcomes capturing mental healthcare utilization, including
mental health counseling or therapy within the last 4 weeks, or medication to help with
emotions, behavior, or concentration.

Covariates
We adjusted models for variables representing potential confounders of the relationship

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between CTC receipt and the outcomes: gender, race/ethnicity, income, marital status,
number of children, and education. We also included fixed effects for bi-weekly survey
wave to account for secular trends in mental health that occurred during this period due to
underlying factors affecting all individuals.

Statistical Analysis
Primary Analysis—We first calculated descriptive statistics stratified by (1) whether
households included children and (2) whether the interview was conducted after the CTC
expansion.

We then estimated the effect of the expansion using a difference-in-difference-in-differences
(i.e., triple-difference, or DDD) approach. DDD analysis builds on traditional difference-in-

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differences (DID) analysis, which is a quasi-experimental technique suited to examining
the effects of policy changes while accounting for underlying trends.(38, 39) These
methods compare pre-post changes in outcomes among a “treatment” group (i.e., adults
with children), while “differencing out” underlying secular trends in outcomes in a
“control” group (i.e., adults without children). The triple-difference approach enables further
refinement of the treatment and control groups to estimate the effects on subgroups most
affected by the policy. Specifically, we included an additional set of interaction terms

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between the primary exposure variable and a binary variable for whether an individual’s

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income was below $35,000. This is because the lowest-income households were the primary
beneficiaries of the expanded CTC, as they were more likely to be newly eligible and to
receive the largest payments.

The triple interaction term in DDD models was therefore composed of three variables: (1) an
indicator for whether the interview occurred after (versus before) the CTC expansion, (2) an
indicator variable for adults with (versus without) children; and (3) an indicator variable for
whether the individual belonged to a lower (versus higher) income group. The equation for
the analysis and additional details about model assumptions are included in the Appendix,
including Appendix Exhibits A1–3.

Secondary Analyses
Subgroup Analyses: We evaluated whether the CTC had a greater impact on mental health

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among racial/ethnic subgroups that may be more likely to benefit from the income boost. To
do so, we conducted additional DDD analyses, including an interaction term between race/
ethnicity and the primary exposure variable (i.e., the interaction between pre-post expansion
and adults with versus without children).

Sensitivity Analyses: As an additional sensitivity analysis, we assessed whether there were
changes in the effects of the monthly CTC payments over time (e.g., whether mental health
improved initially but then returned to baseline). To do so, we modified the main analysis to
include a categorical variable for bi-weekly survey wave instead of using a binary pre-post
variable to represent time. Second, to account for missing values for key covariates, we
conducted multiple imputation using chained equations (see Appendix).

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Ethical Approval
This study involved publicly available de-identified data. Ethical approval was not required.

RESULTS
Sample Characteristics
The final sample included adults with children (112,862 observations before and 145,429
after the CTC expansion) and adults without children (237,901 observations before and
316,122 after the expansion) (Exhibit 2). Adults with children were more likely to be
younger, married, Hispanic, Black, and less educated compared to adults without children.
Indicators of mental health were worse among adults with children. Importantly, DID
analysis does not require that characteristics of the treatment and control group be similar,

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but rather that trends (i.e., slopes) in outcomes be parallel during the pre-revision period.
Descriptions of the results of analyses to evaluate the validity of model assumptions are
provided in the Appendix.

Effects of CTC Expansion
The CTC expansion was associated with decreased depressive (−1.7, 95% CI: −2.6, −0,7)
and anxiety (−3.4, 95% CI: −4.5, −2.4) symptoms among low-income adults with children

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(Exhibit 3). We did not observe an association with utilization of mental health services or

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prescriptions.

Secondary Analyses
In subgroup analyses by race/ethnicity (Exhibit 4), there was a larger decrease in both
depressive and anxiety symptoms among Black adults compared with White adults with
children (interaction term coefficient for Black versus White −1.4for depressive symptoms,
95% CI: −2.9, −0.00; −2.3 for anxiety symptoms, 95% CI: −3.9, −0.7). Adults of Hispanic
and other racial/ethnic backgrounds also experienced greater reductions in anxiety compared
with White adults (interaction term coefficient for Hispanic −2.3, 95% CI: −3.9, −0.7;
interaction term coefficient for other racial/ethnic groups −3.3, 95% CI: −5.2, −1.4). There
were no differences for Asian families compared with White families for and outcomes,
and there were no significant differences by race/ethnicity in mental healthcare utilization

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(Appendix Exhibit A4).

In the secondary analysis in which we examined whether the mental health effects of
monthly CTC payments changed over time, there were no clear trends to suggest either early
or accumulated beneficial effects (Appendix Exhibit A5). In the secondary analysis in which
we imputed missing values for income, the results were similar to findings for the main
analysis, suggesting that complete case analysis omitting those with missing income did not
contribute to bias (Appendix Exhibit A6–7).

DISCUSSION
During the COVID-19 pandemic, the Child Tax Credit was temporarily expanded to
millions of families for the first time, allowing 27 million additional children from the

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most economically disadvantaged families to receive the full benefit size.(40) This study
examined the effects of this increased income on mental health among adults with children
using a large serial cross-sectional national data set and rigorous quasi-experimental
analyses. We found that the expanded CTC was associated with reduced anxiety symptoms
among low-income adults with children, as well as greater mental health benefits among
Black and Hispanic individuals. Previous studies have also shown a link between financial
hardship and mental health.(41, 42) In the overall sample and among each subgroup,
there was no change in mental healthcare visits or prescriptions, suggesting that healthcare
utilization was not the primary pathway explaining the results.

The reduction in the prevalence of clinically meaningful anxiety symptoms (3.4% points)
represents a 13.3% reduction from baseline anxiety levels (25.5%) among adults with

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children. While this may be a modest change in risk at the individual level, this represents
a meaningful change in the distribution at the population level,(43) particularly considering
the challenging pandemic-related circumstances during which it was implemented, and
potential cumulative effects if the benefit were to be extended. The effect size is consistent
with prior research finding that the other major U.S. anti-poverty program—the EITC—
also improves long-run mental health among recipients.(22, 44) In fact, one prior paper
examining the short-term impacts of the EITC found no effects on mental health;(45) it may
be that the more regular payments of the expanded CTC were more effective in this respect.

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Additionally, while receipt of some public benefits may lead to feelings of stigma that

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reduce participation or worsen mental health,(46–48) the expanded CTC benefit was nearly
universal with few administrative burdens among those who received automatic benefits,
perhaps allowing it to be more impactful for mental health.(49)

We also noted that the mental health benefits of the CTC expansion were largest among
adults of Black, Hispanic, and other racial/ethnic backgrounds. Of note, these groups stood
the most to gain from the expanded CTC. During the COVID-19 pandemic, Black and
Hispanic families reported higher rates of job loss, 44 percent and 38 percent in October
2021 respectively, compared to 23 percent for White families, with similar disparities during
earlier periods.(50) Due to historical and current structural racism and marginalization, these
groups also have less wealth and therefore less ability to withstand acute and chronic
economic adversity.(8, 30, 51) Hispanic families are also more likely to be ineligible
for other safety net policies because of immigration status, perhaps making the CTC a

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more salient program for them. For example, the federal EITC is only available to U.S.
citizens and permanent residents, while the CTC was available to mixed immigration-status
families as long as the child had a social security number. In contrast, we found that Asian
individuals benefited similarly to White individuals. While Asians overall are likely to be of
higher socioeconomic position than other communities of color, this may mask disparities
within this heterogeneous group.

When examining one possible mechanism through which the increased income from
the CTC may have improved mental health, we found no changes in mental healthcare
utilization or prescriptions, suggesting that these were not the primary pathway explaining
the reductions in depressive and anxiety symptoms, at least in the short term and in context
of altered utilization patterns during the pandemic. However, recent studies using this

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data set and similar study designs have noted that the monthly CTC payments resulted
in reductions in markers of financial hardship, with improved food sufficiency and more
confidence in the ability to pay for housing.(17, 52) This is consistent with prior studies that
have also shown that food sufficiency and reduced financial hardship are associated with
improved mental health.(53–55)

This study has several strengths, including the use of a large serial cross-sectional diverse
national data set, and a rigorous quasi-experimental study design. It provides timely
evidence on a policy which is actively being debated by federal and state legislatures. The
study also has limitations. One is that the HPS is a repeated cross-sectional survey, so we
cannot observe changes in specific individuals’ mental health after receiving CTC benefits
as we could in a panel dataset. Additionally, HPS suffers from a high rate of non-response

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as with many other national surveys; results therefore may not generalize to those not
included in this study. Another limitation is that covariates and outcomes were self-reported
and may suffer from standard reporting biases. Finally, as with any DID analysis, there
may be residual confounding based on contemporaneous policy changes or other exposures
that differentially affected the treatment and control groups; we evaluated several model
assumptions to lessen concerns about this issue.

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The 2021 CTC expansion reduced child poverty by half, but its expiration caused millions

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of children to fall back into poverty.(18) Our study adds to a small but growing body of
work that shows that the CTC not only increased food sufficiency but also improved mental
health among adults with children, particularly the most marginalized groups. By reducing
financial hardships, this policy has the potential to improve the environments in which
vulnerable low-income children grow up. These findings are important for Congress and
state legislators to weigh as they consider making the CTC and other similar tax credits
permanent to support economically disadvantaged families, particularly as the economic
recovery from the pandemic drags on, and as already marginalized families continue to be
left behind.

Supplementary Material
Refer to Web version on PubMed Central for supplementary material.

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Exhibit 1. Potential pathways linking economic policy, poverty, and mental health

Author Manuscript

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Batra et al. Page 13

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Exhibit 3. Effects of the 2021 Child Tax Credit expansion on mental health and healthcare
utilization Source:
Authors’ analysis of data from U.S. Census Household Pulse Survey Note: **p < 0.01, *p
< 0.05. Coefficients are plotted as point estimates (boxes) with 95% confidence intervals

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(whiskers). Coefficients are derived from models in which the primary exposure is a triple
interaction term between an indicator for whether the interview occurred after (versus
before) the CTC expansion, a binary variable representing adults with (versus without)
children, and a binary variable for whether the interviewee belonged to a lower (versus
higher) income group. All regressions adjusted for gender, race/ethnicity, income, marital
status, number of children, and level of education as well as fixed effects for bi-weekly
waves. Depressive symptoms were captured using the Patient Health Questionnaire-2 scale,
and anxiety symptoms were captured using the Generalized Anxiety Disorder-2 scale; both
were dichotomized at the standard cut-off of 3 or more to indicate high risk of mental health
problems.

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Exhibit 4. Racial differences in the effects of the 2021 Child Tax Credit expansion on mental
health
Source: Authors’ analysis of data from U.S. Census Household Pulse Survey
Note: **p < 0.01, *p<0.05. Coefficients are plotted as point estimates (boxes) with 95%
confidence intervals (whiskers). Coefficients are derived from models in which the primary
exposure is a triple interaction term between an indicator for whether the interview occurred
after (versus before) the CTC expansion, a binary variable representing adults with (versus
without) children, and a binary variable for whether the interviewee belonged to a given
racial/ethnic group (reference category: White). All regressions adjust for gender, race/

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ethnicity, income, marital status, number of children, and level of education as well as fixed
effects for bi-weekly waves. Depressive symptoms were captured using the Patient Health
Questionnaire-2 scale, and anxiety symptoms were captured using the Generalized Anxiety
Disorder-2 scale; both were dichotomized at the standard cut-off of 3 or more to indicate
high risk of mental health problems.

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Exhibit 2

Sample characteristics

Before July 15,2021 After July 15,2021 Batra et al.

Adults without children Adults with children Adults without children Adults with children

Mean (SD) or Percent

Age 57.3 (15.3) 44.8 (11.9) 56.1 (15.9) 44.0 (11.9)
Male 42.7 36.9 42.9 36.6
Married 53.9 70.7 52.7 69.9
Less than high school or high school 11.9 13.1 12.2 13.2
Income
Less than $25,000 10.7 8.9 11.7 9.5
$25,000, $34,999 8.9 7.6 9.3 7.5
$35,000, $49,999 10.9 8.9 11.4 9.0
$50,000, $74,999 18.2 14.9 18.1 14.6
$75,000, $99,999 14.8 13.9 14.6 13.7
$100,000, $149,999 17.9 20.4 17.3 20.3
$150,000, $199,999 8.8 10.6 8.2 10.8
$200,000 and above 9.8 14.8 9.5 14.5
Race/Ethnicity
Non-Hispanic White 79.3 68.9 78.9 68.6
Non-Hispanic Black 6.3 8.5 6.4 8.7
Asian 4.5 6.8 4.4 6.5
Health Aff (Millwood). Author manuscript; available in PMC 2023 April 11.

Hispanic 6.0 10.2 6.4 10.4
Other 3.9 5.7 3.9 5.8
Mental Health Outcomes
Depressive symptoms (continuous) 1.5 (1.8) 1.6 (1.8) 1.3 (1.7) 1.4 (1.8)
Depressive symptoms (score ≥ 3) 16.4 18.4 17.2 19.9
Anxiety symptoms (continuous) 1.8 (1.9) 2.1 (2.0) 1.5 (1.9) 19 (2)
Anxiety symptoms (score ≥ 3) 20.1 25.5 21.6 29.3
Secondary Outcomes
Page 15
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Before July 15,2021 After July 15,2021

Adults without children Adults with children Adults without children Adults with children

Mean (SD) or Percent Batra et al.

Utilization of mental health services 16.5 21.8 18.4 23.3
Mental health prescription 22.4 23.6 23.9 24.6
Confident in ability to pay mortgage/rent 78.3 72.3 75.8 70.3
Difficulty with household expenses 34.8 45.1 37.5 49.9
Food sufficiency 81.3 74.0 80.4 73.6
N 237,901 112,862 316,122 145,429

Source: Authors’ analysis of data from U.S. Census Household Pulse Survey

Note: N = 812,314. Data were drawn from the Household Pulse Survey, April 14, 2021-January 10, 2022, including individuals with non-missing information on the mental health outcomes of interest.
Depressive symptoms were captured using the Patient Health Questionnaire-2 scale, and anxiety symptoms were captured using the Generalized Anxiety Disorder-2 scale; both were dichotomized at the
standard cut-off of 3 or more to indicate high risk of mental health problems. Not married category includes single, divorced, widowed, separated. SD: standard deviation.

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