The American Rescue Plan Act of 2021 (ARP) temporarily increased the child tax credit (CTC), made the credit fully refundable, and authorized the IRS to issue up to half the credit as an advance monthly payment beginning in July 2021. The IRS reports that nearly 61 million children received the payments in August 2021, which constitutes a large share of the target population but falls short of the estimated number of children eligible for the credit. In this brief, we use nationally representative data from the US Census Bureau’s Household Pulse Survey collected between July and September 2021 to examine receipt and use of the advance CTC payments among adults living with children under 18, including how these vary by race, ethnicity, and household income. We find the following:

• Among adults living with a child under 18 in the household, 57 percent reported receiving a CTC payment in the last four weeks. Reported rates of receipt were lowest among Hispanic/Latinx adults (54 percent); non-Hispanic/Latinx adults who are American Indian/Alaska Native, Native Hawaiian/Pacific Islander, or more than one race (53 percent); and adults with household incomes below $25,000 (47 percent).
• Across racial and ethnic groups, 44 to 54 percent of adults with incomes below $25,000 reported receiving an advance CTC payment. This rate is 7 to 18 percentage points lower than rates for adults in the same racial and ethnic group with incomes of $75,000 or more.
• About half of adults (51 percent) reported spending the credit on food. The next most common purchases included clothing (30 percent), utilities (29 percent), and schoolbooks and supplies (25 percent).
• Compared with adults with incomes of $75,000 or more, adults with incomes below $75,000 were more likely to spend the credit on food, clothing, utilities, schoolbooks and supplies, rent, and vehicle payments and were less likely to save the credit.
• Nearly 4 in 10 adults who received the credit (39 percent) reported using it mostly to pay off debt, 3 in 10 (30 percent) mostly spent it, and 3 in 10 (30 percent) mostly saved it.
• Groups who have less wealth and have faced disproportionate economic impacts during the pandemic, including Black and Hispanic/Latinx adults and people with lower incomes, were more likely than other groups to use the credit to pay off debt.
• Adults with incomes of $75,000 or more were the only group that was more likely to mostly save the credit than to either spend it or use it to pay off debt. However, the ability to save the credit among adults within this income group varied by race and ethnicity in ways that track with racial and ethnic wealth disparities.

Though advance CTC payments are helping households with children cover basic expenses and improve their financial circumstances, the payments are not reaching many households likely eligible for them, and people with the lowest incomes report the lowest rates of receipt. Federal and state agencies, local officials, schools, and community organizations can support outreach and assistance to eligible households who have not received or claimed the credit. As Congress considers extending the ARP’s changes to the CTC, it should also consider ways to lessen the administrative burden of claiming the credit for families with very low incomes.