Expanding the Earned Income Tax Credit for Childless Young Adults Improves Housing Security: Evidence from the 2021 American Rescue Plan Act

Young adults ages 18 to 24 in the United States face some of the highest poverty rates of any age group: 1 in 5 lives in poverty,1 and over half have incomes below 200% of the poverty threshold (approximately $32,000 for a one-person household in 2024). High living costs and increasing difficulty securing stable full-time employment further complicate the transition from childhood to financial independence. Yet major tax and cash transfer programs, including the Earned Income Tax Credit (EITC), have historically excluded childless young adults.

The EITC is a refundable tax credit for low- and moderate-income workers that lifts about 4.4 million people above the poverty line each year. However, the EITC for workers without children — the so-called "childless EITC" — has historically been very limited. Before 2021, the maximum credit was only $538 and was restricted to workers ages 25–64 with earned income below $15,820. In March 2021, the American Rescue Plan Act (ARPA) temporarily expanded the childless EITC for one year by:

1. nearly tripling the maximum credit from $538 to $1,502,
2. lowering the minimum age of eligibility from 25 to 196 for non-student tax filers, and
3. raising the income eligibility limit from $15,820 to $21,430 ($27,380 for joint filers).

The expanded EITC was delivered as a lump-sum payment through tax refunds when workers filed their 2021 returns in early 2022. However, the expansion applied only to tax year 2021, and the credit reverted to its pre-ARPA parameters in 2022, once again excluding workers under age 25.

Leveraging this temporary change, we examine whether extending the EITC to young adults — a group with high rates of economic hardship and historically excluded from most government transfers — reduced material hardship. We examine three forms of hardship: not having enough food to eat (food insufficiency), falling behind on rent or mortgage payments, and difficulty covering routine household expenses such as utilities, car payments, and medical bills.

Using nationally representative data from the 2021–2023 U.S. Census Bureau's Household Pulse Survey, the study includes 10,199 childless adults with incomes below $25,000 who were most likely to be eligible for the expanded EITC. We compare young adults aged 19–24 who became newly eligible for the expanded childless EITC in 2021 to adults aged 25–34 who were eligible for the credit the whole time. The 25–34 group and data from 2021 and 2023 — before and after people received the expanded EITC returns in 2022 — provide benchmarks for what would have happened in the absence of the policy change. Because broad economic shocks would affect both age groups and all years similarly, differences in hardship that emerge specifically for 19 to 24 year olds in 2022 are attributed to the EITC expansion and are unlikely to be driven by other factors. Our findings show that this temporary credit helped young working adults better make ends meet.

The expanded childless EITC reduced the share of young adults who reported being behind on their rent or mortgage payments by almost one-third (29%, or a reduction of 3.2 percentage points). The reduction was concentrated in April 2022, when most tax refunds were received, and disappeared after the expansion expired, suggesting that many young adults used the lump-sum refund to catch up on overdue housing payments. Nationally, this means that among the roughly 1.7 million young adults with low incomes living in households that rent or carry a mortgage, about 55,000 avoided falling behind during the 2022 tax season.

We also see reductions in food insufficiency and difficulty paying for routine expenses, but these are smaller and less consistent than the reduction in people behind on housing payments. It is an encouraging pattern but not an established effect of the temporary childless EITC expansion