Tax credit supporting thousands of families expires Wednesday

Dec 13, 2021

NBC Montana

The six-month-old monthly child tax credit system is set to expire Wednesday unless the Senate can pass President Joe Biden’s Build Back Better Plan.

Right now, nine out of 10 kids in Montana qualify for the tax credit. It gives a credit worth $300 a month for every child under 6 and $250 for kids ages 6 to 17 years old.

Advocates for the credit say it has been a pivotal monthly payment for low-income families and families who do not qualify for other child care support.

“We're not talking only about the lowest income families here, we're talking about the majority of Montana families who are benefiting from the child tax,” said Zero to Five coordinator Grace Decker.

Statistics from the census bureau show the majority of the money spent with these credits is for child care support and necessary items.

“Especially low-income families are using their credit for food, for utilities, for rent. And we can see how critical this credit is, because families are using their credit to meet their essential needs,” said Jackie Semmens, policy analyst with Montana Budget and Policy Center.

It is reported that 40% use the credits for utilities, 65% for food and 29% use the funds for rent.

Semmens notes the credit system has helped bring children out of poverty, and if it is not extended, there is a risk of an increase in children facing the poverty line again.

“The changes that have been made to it over the past year are one of the biggest steps in reducing child poverty that Congress has taken in a long time,” said Semmons. “This bill, if it passes, will reduce childhood poverty by 20%. And it's really essential to improving the lives of children and making childhood poverty a thing of the past.”

If this bill does not pass, families will have to revert to the old credit system that will bring two changes for Montana families. Families living on low incomes will be receiving a smaller amount and 17-year-olds will no longer qualify for the tax credit.

“This will be really hard, especially in the middle of winter and at a time when families are struggling with high rates of inflation, to have to go back to losing a really significant credit for their families,” said Semmens.

Decker says families will also need to revert to social services if the credit is not extended and adds families should prepare now.

“Social services that serve young children and families need to be poised potentially to reach out and help more families if budgets get tighter for those for whom this tax credit is going away,” said Decker.

As it stands right now, the bill has passed the House. It is now in the Senate, where leaders are working to get all 50 Democratic leaders on board to pass the bill before Christmas.

The Office of Sen. Steve Daines sent out the following statement the Child Tax Credit:

"The Senator worked to successfully double the child tax credit through the Tax Cuts and Jobs Act. Unfortunately, while there is a potential for bipartisan discussion over the child tax credit issue, the Democrats have left the Republicans out of all of the negotiations, and are deciding to move forward with turning the child tax credit into a cash welfare program with NO work requirements. This approach is not good for our families or country. Another good nugget of information is the senator’s work on the “Temporary Assistance for Needy Families” program known as TANF. The Senator has sponsored legislation to reauthorize and reform this program, that helps low income families, and it also includes a big plus up in funding for child care."

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.