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Committee hears plan for $1,200 child tax credit for families with young children
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Summary
House Bill 220 would provide a targeted state child tax credit up to $1,200 for families with children ages 5 and under, phased out at middle incomes; proponents cited poverty‑reduction evidence while revenue staff outlined a roughly $30 million cost estimate based on 2023 filings and demographic assumptions.
Representative S.J. Howell presented House Bill 220, which would give families with children ages 5 and younger a refundable (?) tax credit up to $1,200 per child phased down between household incomes of $50,000 and $58,000. "House Bill 220 creates a child tax credit," Howell said, adding the bill would reach an estimated 47,000 households and almost 85,000 children under the sponsor's assumptions.
Proponents including Rose Bender of the Montana Budget and Policy Center and Kaly Wicks of 0 to 5 Montana argued the credit addresses rising costs for families and early‑childhood needs. Bender cited federal experience showing expanded child credits reduce child poverty. Wicks told the committee childcare costs average nearly $19,000 for households with children under five and urged the committee to support the measure.
Alan Lloyd of the Montana Society of CPAs testified in reluctant opposition to using the tax code for this purpose, repeating the organization's preference for simpler tax administration.
Department of Revenue staff, including Aaron McNay, walked members through the fiscal‑note methodology: analysts used 2023 Montana income tax returns and then applied age shares (about 29.6% for the eligible age group) and income‑limit filters to estimate roughly $30 million in cost under the stated assumptions. McNay said he adjusted for utilization and that some estimates rely on approximations because tax returns do not list dependent ages directly.
Committee members pressed on assumptions underpinning the estimate, including how the phaseout interacts with federal credits, the income limits used, and how many households and children would qualify; staff said they factored Montana filing data and additional demographic adjustments into the estimate. Members also asked about short‑term measurable impacts (reduced food insecurity and immediate household spending) and longer‑term outcomes (education and employment), which proponents framed as longer‑term benefits.
Howell closed the hearing and asked the committee to give the bill consideration; the committee recessed for executive business. The bill will proceed through committee processes, including fiscal and administrative review, before any final action.