How Gen Z Could Get an Extra $500 a Month

In an ambitious move to combat young adult poverty, Democratic Representatives Morgan McGarvey and Bonnie Watson Coleman have introduced legislation aiming to grant every member of Generation Z in the U.S. a $500 monthly payment.

The Young Adult Tax Credit Act introduced Tuesday seeks to address the disproportionate poverty rates faced by young adults, highlighted by McGarvey's acknowledgment of the 22 percent poverty rate among the age group in Kentucky, which he represents.

By creating an unconditional monthly cash transfer, the bill intends to provide young adults with the financial support necessary to navigate life transitions, whether pursuing education, starting their careers, or establishing independence.

"Our social safety net rightfully has programs for children and seniors, but it doesn't address the prevalence of young adult poverty," McGarvey said in a statement issued Tuesday. "Twenty-two percent of 18-24-year-olds in Kentucky live below the poverty line, and we must do something to help."

"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."

The proposed monthly payments, designed as advanced, refundable tax credits indexed to inflation, represent a policy shift toward recognizing and alleviating the economic challenges confronting young Americans.

The bill, backed by a diverse group of organizations like Advocates for Youth, Center for Law and Social Policy (CLASP), Center for Popular Democracy, Center for the Study of Social Policy and others, proposes a substantial investment in the country's young people. The act builds on the promising outcomes of a pilot program in Louisville, McGarvey said, and aims to establish a solid foundation for future reforms to the social safety net.

"I am proud to co-lead this legislation with Congressman McGarvey which [puts] cash transfers directly into the hands of young adults as they navigate this critical point in their lives," Watson Coleman said in the statement. "Across the nation we've seen the positive [effects] of people utilizing direct income support – it puts us on the path to finally abolishing poverty in the United States."

An impact analysis from Policy Engine underlined the transformative potential of the legislation, indicating that 22 percent of all Americans could see an increase in their household income, with more than 4 million being lifted out of poverty.

Newsweek has reached out to McGarvey and Watson Coleman by email for comment on Wednesday.

The Context

The Act specifies that individuals between the ages of 18 to 24, including U.S. citizens and immigrants with either a Social Security number or a Tax Identification Number, would qualify for the advanced, refundable tax credit. The inclusivity extends to DACA recipients and undocumented immigrants, as well.

The payment is safeguarded against any form of offset or garnishment, ensuring that recipients can utilize the funds for essential expenditures without fear of them being appropriated for student loan repayments or other debts.

Further, the payments will not affect the eligibility for other social programs like the Supplemental Nutrition Assistance Program (SNAP), preserving the integrity of the safety net for young adults.

In terms of implementation, if passed, the bill mandates the IRS to launch an outreach campaign aimed at increasing awareness and participation among young adults, especially those less likely to file taxes or possess bank accounts.