Children from the KU Kids Deanwood Child Care Center complete a mural celebrating the launch of a local child tax credit in 2021 in Washington, D.C. New research suggests cities could significantly reduce childhood poverty by creating their own child tax credit programs. (Photo by Jemal Countess/Getty Images for Community Change)

Child tax credits are becoming more popular across the country, with more than a dozen states offering them as financial relief toward the cost of raising kids.

But new research suggests cities could significantly reduce child poverty by offering child tax credit programs of their own.

An analysis by the Center on Poverty and Social Policy at Columbia University and the left-leaning Institute on Taxation and Economic Policy found that municipal programs could move the needle with relatively small amounts of money: offering $1,000 or less per year to low- and middle-income families could cut child poverty rates by 25% in several cities.

Researchers say this sort of new assistance would not only boost household finances, but also likely create more demand for local businesses, stabilize housing markets and increase local tax revenue.

The study focused on 14 cities: Baltimore; Charlotte, North Carolina; Chicago; Denver; Houston; Jacksonville, Florida; Los Angeles; Minneapolis; New York; Oakland, California; Philadelphia; Phoenix; Seattle; and the District of Columbia. The analysis found that most of those cities could make significant gains by spending less than 15% of municipal revenues on new child credit programs.

Red states pushed child tax credits this year, but the broadest plans fizzled

In Minneapolis, for example, researchers said a new program that cost less than $30 million per year would cut the city’s poverty levels by half when accounting for existing state and federal credits. (The mayor there has recommended spending about $2.03 billion in the 2026 fiscal year budget.)

The prospect of creating new tax credit programs would likely pose financial and logistical challenges. Cities already are juggling many other priorities including public safety and housing affordability, while at the same time facing what some experts have characterized as a “fiscal crisis” from growing climate change costs, federal funding cuts and declining downtown activity.

Some cities, including Baltimore, New York and Philadelphia, have city income taxes that could incorporate a child tax credit. But, the research noted, cities without that tax managed to distribute pandemic recovery funds through basic income programs. That experience shows cities could create their own standalone applications, leverage IRS data-sharing agreements or  work with third-party administrators.