WASHINGTON, D.C. — Youth activists from A New Deal for Youth, an initiative supported by the Center for Law and Social Policy (CLASP), endorsed the Young Adult Tax Credit Act, which was introduced on March 5 by Rep. Morgan McGarvey, D-Ky-03, and Rep. Bonnie Watson Coleman, D-NJ-12. This legislation creates a universal $500 monthly payment, indexed to inflation, for all 18–24-year-olds in the United States, including its territories. This cash transfer would allow young people to access capital earlier in their lives, better afford necessities, or otherwise build their lives and be more integrated into the tax system.
“This $500 monthly tax credit means someone can make a car payment, buy groceries, pay rent, or afford childcare.”
Congressman McGarvey
This legislation creates a universal $500 monthly payment, indexed to inflation, for all 18–24-year-olds in the US, including in territories such as Puerto Rico and American Samoa. This unconditional cash transfer would allow young adults to access capital earlier in their lives, better afford necessities, or otherwise build their lives and be more integrated into the tax system.
“New Deal for Youth is proud to have worked with Rep. McGarvey on drafting the Young Adult Tax Credit Act,” said Rebecca Do, A New Deal for Youth Changemaker. “We are excited that this bill is being introduced. Now, we need other elected officials to listen to youth voices and pass this landmark piece of legislation.”
Our social safety net rightfully has programs for childhood and seniors, but it fails to address the prevalence of young adult poverty. We should have a program that invests in young people, helping them stay afloat and giving them the tools to thrive in and contribute to society for the rest of their lives.
The Young Adult Tax Credit Act is designed based on lessons learned from a Louisville guaranteed income pilot (see video below) and was developed in consultation with young people, including New Deal for Youth Changemakers.
Young Adult Tax Credit Act: Legislative highlights
Eligibility:
- Must be 18-24 years old.
- Must have a social security number (US citizen) OR possess a Tax Identification Number (US immigrants, including DACA recipients and undocumented immigrants are included).
The payment:
- Is an advanced, refundable tax credit, disbursed monthly and indexed to annual inflation adjustments.
- Cannot be used in any offset or garnishment cases, including student loan repayment, and does not count towards income measures for other
social programs.
Implementation
- The bill directs the IRS to conduct an outreach campaign, prioritizing members of populations which are less likely to file taxes or have bank
accounts. - For dependents, the payments will be sent to the tax filer (e.g., the parent) for the remainder of the year until the young adult files a tax return
not as a dependent. Then, the independent young adult will be eligible to receive payments directly for the upcoming year (i.e., whom the
payment goes to is based on the previous year’s dependent status). - The bill creates an online portal that is mobile friendly and in multiple languages to allow the young adult to update their information throughout
the year.
Young adults have one of the highest poverty rates of any demographic group in the U.S.
“Twenty-two percent of 18-24-year-olds in Kentucky live below the poverty line, and we must do something to help,” said Congressman McGarvey. “Louisville recently conducted a successful pilot program directing payments to young adults so they keep moving ahead instead of falling behind. That’s why I’m proud to introduce the Young Adult Tax Credit and establish a national program that invests in our upcoming generations, allowing them to thrive in and contribute to society for the rest of their lives. This $500 monthly tax credit means someone can make a car payment, buy groceries, pay rent, or afford childcare. I’m excited to work with my colleagues in Congress to move this across the finish line and start lifting young people out of poverty.”
“As recently as last summer more than half of young people reported some difficulty meeting their basic living expenses.”
Dr. Nia West-Bey, director of youth policy, CLASP
The Young Adult Tax Credit has the potential to dramatically reduce poverty for young people, especially for young adults of color. As stated in a newly-published CLASP publication titled, Two New Guaranteed Income Bills Bring Different Strategies to Reducing Young Adult Poverty, “According to the Official Poverty Measure, 15.3 percent of young adults ages 18 through 24 were living under the Federal Poverty Line as of 2022. When using the Supplemental Poverty Measure (SPM), the rate increases to 17.7 percent of all young people; but 22.5 percent of young people of color lived in poverty as measured by the SPM. The expanded CTC that was temporarily implemented in tax year 2021 cut child poverty nearly in half, especially benefitting Black and Latino kids.”
“It’s a little known fact that young adults have one of the highest poverty rates of any demographic group in the country,” said Dr. Nia West-Bey, director of youth policy at CLASP. “As recently as last summer more than half of young people reported some difficulty meeting their basic living expenses. These are policy choices, and the Young Adult Tax Credit Act represents a huge step forward in our commitment as a nation to advancing economic justice for young adults.”
“We owe young people a strong foundation so that they can build healthy and fulfilling lives for themselves and participate fully in their communities,” said Megan Martin, executive vice president, Center for the Study of Social Policy. “But today, too many young people struggle to make ends meet because we have failed to live up to our collective responsibility, excluding them from government programs and denying them opportunities to pursue their goals. The Young Adult Tax Credit Act is a critical and overdue step forward. It would provide the strong economic foundation all young people deserve— and in doing so ensure a brighter future for us all.”
“A New Deal for Youth envisions a world where the economy is designed to uplift all young people and abolish structural barriers,” wrote Makayla McDonald, A New Deal for Youth Changemaker, and Ashley Burnside, CLASP senior policy analyst, Income and Work Supports. “[The Young Adult Tax Credit Act] would accomplish this by providing young people with unrestricted investments. CLASP and A New Deal for Youth urge Congress to pass [the bill] to invest in and support young people.”
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A one-page bill explainer can be found here. The full bill text can be found here.
A New Deal for Youth (ND4Y) is a youth-led, youth-centered effort advocating for the creation of new systems, policies, investments and structures that reimagine life for young people in America. ND4Y serves youth who have been left behind — the disconnected and the disenfranchised, marginalized, misrepresented, and silenced, young people who may not use their voice as much as they would like to. We center Indigenous and Black communities and youth of color; LGBTQIA+ youth; disabled folks; all immigrant communities, including undocumented young people; young parents; transition age youth; and foster care and former foster care youth. We recognize the intersections of these identities, including intersections with gender and gender identity.
Endorsing Organizations as of March 05: Advocates for Youth, Center for Law and Social Policy (CLASP), Center for Popular Democracy, Center for the Study of Social Policy, Kentucky Youth Advocates, National Network for Youth, National Youth Employment Coalition, NETWORK Lobby for Catholic Social Justice, New Deal for Youth (ND4Y), Point Source Youth, Prosperity Now, United for a Guaranteed Income, and Young Invincibles.
Bill sponsors: Rep. Morgan McGarvey, D-Ky-03, and Rep. Bonnie Watson Coleman, D-NJ-12.
Rep. McGarvey’s office is currently looking for cosponsors, if you’re interested or have questions, please reach out to Trevor.OConnor@mail.house.gov