How State Factors Moderated the Impacts of the 2021 Child Tax Credit on Mental Health and Financial Hardship

Introduction

Mental health problems during the COVID-19 pandemic in the U.S. were partly alleviated by economic policies. For example, the 2021 expansion of the child tax credit provided cash support to many families and improved mental health. Although the child tax credit was a federal policy, there may be geographic disparities in policy impacts depending on state contexts. This study examined how state factors modified the child tax credit’s effects.

Methods

This study used April 2021–January 2022 individual-level data from the Census Household Pulse Survey (N=944,189). Outcomes included depressive symptoms, anxiety symptoms, recent utilization of mental health counseling, and financial hardship. State-level modifiers included (1) social safety net policy context (as a composite measure and for individual policies) and (2) racial equity. This study examined whether state-level factors moderated the effects of the child tax credit expansion using a quasi-experimental difference-in-difference-in-differences approach, comparing pre–post differences among child tax credit–eligible versus ineligible individuals. Analyses were conducted during 2023–2025.

Results

There was no effect modification of the child tax credit by the composite state safety net policy measure or racial equity index. However, when examining individual policy measures, in states with higher Special Supplemental Nutrition Program for Women, Infants, and Children caseloads, the child tax credit expansion was associated with improved confidence in the ability to pay rent/mortgage. In states with higher Supplemental Nutrition Assistance Program accessibility, the child tax credit expansion was associated with reduced food insufficiency and lower utilization of mental health services.

Conclusion

The 2021 federal child tax credit’s effects were modestly moderated by local state policy contexts, potentially contributing to geographic health disparities. This informs policymaking and research on multilevel policy interactions.