The expanded Child Tax Credit (CTC) under the American Rescue Plan Act (ARPA) of 2021 aimed to mitigate financial hardship during the COVID-19 pandemic by providing fully refundable tax credits to families with children. While the expansion significantly reduced child poverty, its controversial expiration in December 2021 reignited debates about the program’s cost and potential work disincentives. This study investigates the impact of political controversy on the implementation and efficacy of the expanded CTC by addressing two key questions: (1) Why is the expanded CTC controversial? and (2) How did state-level political dynamics influence its impact? A mixed-methods approach was employed, combining qualitative analysis of legislative debates and reports with quantitative analysis of household expenditure data from the Household Pulse Survey. Difference-in-differences (DiD) models assessed changes in expenditure patterns before and after the CTC’s expiration, comparing states with and without their own CTC programs. Results indicate that while the expanded CTC substantially reduced financial difficulty for all recipients, its expiration did not significantly affect families in states with complementary state-level programs compared to families in states without state-level programs. The findings underscore the role of political controversy and federal-state dynamics in shaping policy outcomes and highlight implications for future anti-poverty initiatives.