KIDS COUNT: State Child Tax Credit Can Help Families with Rising Costs

Jul 08, 2024

All Montanan children deserve a strong start in life, but not all of them get the essential resources and opportunities they need to thrive. And as costs continue to climb, so too do the hardships and risks that Montana's children and their families face. Fortunately, investing in Montana’s youth, especially children facing greater economic disadvantages, can make an important difference in their lives today and tomorrow. Policies like a state-level Child Tax Credit (CTC) can dramatically reduce child poverty and improve outcomes in education, health, and long-term earnings.

According to the Economic Policy Institute's Family Budget Calculator, a family of four in Billings, MT, must spend $8,000 a month on essentials like housing, food, and child care. Recent Census data shows the median family income in Billings to be $91,082, or $7,590 a month. 

For families with low incomes, these necessities are even more unaffordable, and families must make the impossible decision about which necessities to forgo. According to the 2024 KIDS COUNT Data Book, 30,937 Montana kids live in households with poverty-level incomes; that's 13 percent of all Montana children. Due to historical policies like the stealing of land from Indigenous people, structural barriers and discrimination, children of color in Montana are more likely to live in families with low incomes. Over 41 percent of Indigenous children in Montana live in families with incomes below the poverty level, compared to 11.4 percent of white children.

Fortunately, policies aimed at alleviating child poverty, like a state-level Child Tax Credit that is fully available to families with low incomes, can help to reduce racial income disparities and promote children’s development. The boost in income from the CTC for families with low incomes allows parents to afford more of the necessities while also promoting a less stressful environment for positive parent-child interactions to take place. In essence, helping families living on low incomes financially would have many short-term and long-term benefits by setting up the next generation for success.

Following the success of the American Rescue Plan Act (ARPA) expansion of the CTC (which ended in 2021), many states have either passed new state CTCs or expanded their existing credits. If Congress made the federal expansion permanent, it would have reduced child poverty by 45 percent for all Montana kids and reduced poverty by 59 percent for Indigenous children in Montana. Montana should join the other 14 states that provide state Child Tax Credits to reduce poverty and support families’ economic security.

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.