Create a child tax credit for the individual income tax
Impact
The implementation of HB 249 would amend state tax law, particularly the relevant sections regarding tax credits and deductions. By allowing refunds even if the taxpayer has no taxable income, the bill ensures that even the lowest income families could benefit from this credit, providing them with direct financial support. This approach aligns with federal provisions for tax credits, helping to bridge state-level financial support for families with national standards. The bill also anticipates a review of this credit during specified bienniums, indicating an ongoing assessment of its effectiveness and necessity.
Summary
House Bill 249 introduces a child tax credit for residents of Montana, allowing eligible taxpayers to claim a credit on their income taxes for each child under their care. The bill specifies two tiers for the tax credit based on the child's age: a maximum refundable credit of $1,200 for children aged five years or younger, and $600 for children aged six years or older. This initiative aims to provide financial assistance to families by reducing their tax burden, particularly benefitting those with lower to moderate incomes who may need it most.
Contention
While HB 249 aims to support families financially, there may be points of contention regarding its fiscal implications. Critics could argue about the potential cost to the state budget, evaluating whether such tax credits could lead to increased financial strain or whether they would effectively stimulate the economy by enabling families to spend more. Moreover, challenges may arise around the income thresholds set for eligibility, as these will determine who can benefit and how the credits are phased out based on income levels.