The Niskanen Center’s second annual Family Benefits Report Card examines how American families benefit from two distinct sets of social policies: traditional social assistance programs, including Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP); and refundable tax credits, including Earned Income Tax Credits (EITC) and Child Tax Credits (CTC).
Federal and state policymakers, however, often navigate between maximizing the anti-poverty and pro-work effects of a family benefit without a full picture of how benefits interact with one another. The results can be precisely opposite of the aims — policies intended to create economic opportunity for those at the bottom of the ladder unwittingly penalize upward mobility.
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- 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.
