HB 391 – The Montana Earned Income Credit: Helping Montana’s Working Families and Economy

  • The Montana Working Families Credit would incentivize work and provides assistance (usually for 1-2 years) to working low-income families. This targeted policy is the most effective anti-poverty program in history, lifting millions of children out of poverty [1]
  • The phased-in EITC encourages work and helps families make ends meet. A state Working Families Credit set at 3% of the federal EITC offers a maximum benefit of $188 (Figure 1).[2]With a federal credit, this is the equivalent to a wage increase of $2.75/hour for a single mother with two
  • The federal EITC is often a temporary safety net. The majority of recipients receive the credit for 1-2 years to cover short-term costs like bills, groceries, and school supplies.[3]
  • Montana families with two children and two parents living in poverty have the third highest tax liability of any state in the Single parent families of two children have the fourth highest tax liability.[4]A Montana Working Families Credit would mitigate the impact on families by reducing their income tax liabilities.
  • Rural residents claim EITC benefits at a greater rate than urban residents. These additional funds go directly into the local economy to help support rural communities, families, and small In 2013, 21% of rural Montanans claimed a federal credit, compared to 18% of the entire population.[5]
  • EITC benefits stimulate the The federal EITC injected $175 million into Montana’s economy in 2012.[6]A State Working Families Credit would provide additional support to families, who are spending those dollars in their local communities.
  • Administrative costs are far lower than social safety net programs. Administrative costs are less than 1% of the benefits [7]

 

Number of Taxpayers Claiming EITC by County (FY 2013) 

Beaverhead 671 Madison 489
Big Horn 1,756 Meagher 161
Blaine 745 Mineral 363
Broadwater 372 Missoula 9,159
Carbon 673 Musselshell 334
Carter 68 Park 1,257
Cascade 7,277 Petroleum 44
Chouteau 324 Phillips 333
Custer 898 Pondera 519
Daniels 93 Powder River 83
Dawson 529 Powell 492
Deer Lodge 713 Prairie 73
Fallon 137 Ravalli 3,230
Fergus 873 Richland 605
Flathead 7,830 Roosevelt 1,271
Gallatin 5,915 Rosebud 895
Garfield 69 Sanders 918
Glacier 1,829 Sheridan 191
Golden Valley 54 Silver Bow 3,047
Granite 198 Stillwater 429
Hill 1,605 Sweet Grass 216
Jefferson 611 Teton 353
Judith Basin 108 Toole 312
Lake 2,883 Treasure 45
Lewis and Clark 4,696 Valley 565
Liberty 90 Wheatland 136
Lincoln 1,533 Wibaux 61
McCone 121 Yellowstone 11,141

Source: Brookings Institution. Earned Income Tax Credit Interactive and Resources

 

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