HB 942 would create a new Montana child tax credit for resident taxpayers who are eligible for the federal child tax credit. The credit would be $1,000 per qualifying child, and because it is refundable, taxpayers could receive the full amount even if their income tax liability is lower than the credit. To claim it, a taxpayer must have earned income and provide a valid Social Security number for each child claimed.
The bill limits the credit to children age 5 or younger at the beginning of the tax year and phases the credit down as federal adjusted gross income rises above $35,000 for single or head-of-household filers and $65,000 for joint filers. The Department of Revenue would annually adjust both the credit amount and the income thresholds for inflation, and the credit would apply to tax years beginning after December 31, 2025. The bill also amends Montana’s tax-credit review statute to add the new child tax credit to the list of credits subject to periodic legislative review.
Impact
HB 942 would add a new refundable individual income tax credit to Title 15, chapter 30, MCA, expanding Montana’s tax code to provide direct tax relief for families with young children. It would also modify section 15-30-2303, MCA, by placing the child tax credit into the state’s biennial tax-credit review process, meaning the Revenue Interim Committee would evaluate it under the same criteria used for other credits. The bill would affect resident taxpayers with qualifying children, especially lower- and middle-income families, while excluding taxpayers without earned income or without valid Social Security numbers for claimed children.
Sentiment
The bill appears to have had some support in the House Taxation Committee, where it received a do-pass recommendation by a 14-7 vote. However, it then faced stronger resistance in House Appropriations, where a motion to table passed 13-9, and the bill ultimately died in process. That voting pattern suggests the policy concept had meaningful support, but concerns about fiscal cost or budget priorities likely prevented it from advancing.
Contention
The main points of contention likely centered on the bill’s fiscal impact and whether the state should create a new refundable tax expenditure. Supporters would view the credit as targeted relief for families with young children and a way to offset the cost of raising children, while opponents may have questioned the affordability of a refundable credit, especially because it could generate refunds even for taxpayers with no income tax liability. The income phaseout, earned-income requirement, and Social Security number requirement may have been intended to narrow eligibility, but the appropriations vote indicates budgetary concerns were significant enough to stop the bill.