Family benefits in America: 2025 report card

• In Event: Economic Mobility and Family Systems: Policy, Wealth, and Inequality

Abstract

Families with young children are potentially eligible for dozens of public benefits to support them during periods of unemployment and to supplement their earnings when they are employed. Access to these benefits varies depending on earnings, marital status, age of children, and where families reside. This patchwork across programs and states is so complex that social scientists, advocates, and policymakers often narrow their focus to examine a single program in isolation. While this gives a clear view of the impact of any one program, it risks missing the forest for the trees. Families with children may find themselves benefiting from two sets of social policies that provide them with cash or with benefits similar to cash. One set comprises traditional social assistance programs and includes Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP). These are federally supported programs that are administered by states and aimed at assisting families whose breadwinners are unemployed and attempting to reenter the workforce.
The other set of policies consists of refundable tax credits, which essentially are benefits administered through the tax code. They include Earned Income Tax Credits (EITC) and Child Tax Credits (CTC). The federal government and many states independently run their own tax credit programs. For 2024, we evaluated total benefits and implicit marginal tax rates that families with young children face when their earnings increase. Our analysis focuses on 11 states: California, Colorado, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, and Vermont. For families with no earnings, total benefits from social assistance and refundable tax credits ranged from $12,362 in New Mexico to $19,394 in California for a single parent with one child, and $20,980 to $30,782 for married parents with two children. These incomes put them between about 60 percent and just short of the federal poverty threshold in 2024. Families face higher implicit marginal tax rates when they move from a minimum-wage job to a median-wage job than when they transition from welfare to a minimum-wage job, affirming recent research indicating that we have moved from a poverty trap to a just-above-poverty trap.

Author

• Joshua McCabe, Niskanen Center
  Presenting Author