Something unusual and quite good happened when President Biden signed the Covid relief bill, the American Rescue Plan, into law on March 11, 2021. The needs of a group of Americans who are typically ignored, single adults with no children, were recognized and addressed.
Maybe you haven’t heard anything about this. In some of the news articles about the legislation, it wasn’t even mentioned in passing. Much of the fanfare focused on the potential of the Plan to lift half of the currently impoverished children out of poverty. That’s important and impressive. Also significant is that many low-income workers with no children will be spared from poverty, too.
In 2020, the Center on Budget and Policy Priorities (CBPP) proclaimed that “childless adults are the lone group taxed into poverty.” The federal tax code has been designed to protect families with children from being taxed into poverty. The standard deduction, the Earned Income Tax Credit (EITC), and the Child Tax Credit (CTC) “are set at levels to ensure that families with children don’t have net federal tax liability if they earn poverty-level wages.”
The same protection was not extended to single adults not raising children in their homes. They began owing income taxes when their earnings were below the poverty level, and they qualified for little or no EITC. In an example described by CBPP, a single woman making the poverty-level wages of $13,340 in 2019 would be pushed $963 further into poverty after she paid income taxes and payroll taxes.
How the American Rescue Plan Helps Single Adults with No Children
The American Rescue Plan remedied that problem by nearly tripling the maximum EITC benefit from $543 to $1,502, and by raising the income level at which taxpayers can get the maximum EITC amount. In addition, the minimum age at which workers could claim the benefit was lowered from 25 to 19. Previously, there was also an upper age limit of 65; that restriction was eliminated.
The White House projects that 17 million low-wage workers will benefit from the Plan, “many of whom are essential workers including cashiers, cooks, delivery drivers, food preparation workers, and childcare providers.”
Families with children benefit from the expanded EITC, too. CNBC estimates that 85 percent of the benefits will go to those families. Previously, though, they received 97 percent.
A Few Words of Caution
The Center on Budget and Policy Priorities warned that, even with the significant gains from the American Rescue Plan, low-wage single adults with no children are still at risk. Many state and local tax plans continue to be regressive, and as a result, vulnerable workers could still end up impoverished.
Another caveat is that the EITC expansion for single workers with no children is just temporary. President Biden has asked Congress to make it permanent.
[Notes: (1) The opinions expressed here do not represent the official positions of Unmarried Equality. (2) I’ll post all these blog posts at the UE Facebook page; please join our discussions there. (3) For links to previous columns, click here.]
About Bella DePaulo
