by Treasurer David McRae | Guest Columnist

Beginning on July 15, most Mississippi parents will begin receiving a monthly child tax credit payment from the federal government. How do you get the most value from these dollars? We have one idea families may want to consider. But first, a little about the credit itself.

Depending on your income, these new payments can be as high as $300 per month for every child in your household under six years of age and $250 per month for those ages 6 to 17. Under current law, the payments are not expected to extend beyond December 2021, so this is a temporary benefit. Full benefits are available to those who made less than $75,000 as a single parent or less than $150,000 as a married couple in 2020. Given that Mississippi’s median household income is around $45,000, it’s safe to assume most families will benefit.

For some, this money is needed to pay for pure necessities, but for those who have more wiggle room in their budget, families may want to consider investing the payments in a 529 education savings plan.

Today, the average Mississippi student graduates with $30,000 worth of debt. Owing that much can impact nearly every aspect of a young person’s life, which is why about 30 percent of graduates say they’re delaying major life milestones (like getting married, buying a home, and starting a family). 

Unfortunately, the student loan problem is only getting worse, as tuition rates are rising quickly. In Mississippi, they’ve spiked more than 70 percent in the last decade! But families can act now to alleviate all or part of that burden.

For as little as $25 (just a small portion of a family’s monthly Child Tax Credit payment), you can begin investing in your child’s education. Once invested, the money has the opportunity to grow in value on a tax-advantaged basis. 

When you’re ready to use the funds, they can be applied to a wide variety of things, including tuition, books, supplies, and certain room and board expenses. If your child doesn’t end up at a traditional two- or four-year college, the money can be applied to apprenticeships and even some certification courses. Even if you don’t use it all, the account can be rolled over to another beneficiary or saved for continued education. 

Here’s the bottom line: The enhanced Child Tax Credit payments are headed to your bank account soon. To get the most out of them, make a plan now for how you’d like to use the funds. You might even consider setting up an automatic monthly deposit from your bank account to a Mississippi 529 savings account for consistent investing. 

For more information on the tax-advantaged education savings plans offered through your State Treasury, please visit Treasury.MS.gov/CollegeSavings.