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

Mar 14, 2017

By MBPC Staff

• 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