AUGUSTA - The Maine House of Representatives unanimously voted on Friday to advance legislation sponsored by Rep. Mo Terry, D-Gorham, that would establish a new, state refundable child tax credit.
LD 1544 would provide relief to parents and Maine families with dependents by replacing Maine's existing, non-refundable dependent exemption tax credit with a new child tax credit that would increase the annual amount families can receive from $300 to $350 per dependent. The bill also indexes the credit to inflation.
Additionally, the bill would remove minimum income requirements, making it available to the lowest income Mainers with dependents. Because the current dependent exemption tax credit is not refundable, families that do not make enough money to have taxable income are not eligible for the credit.
"Providing families with this tax credit will help lower the rates of food insecurity, reduce child poverty and enable more families to pay their bills and make ends meet," said Terry. "The now-expired federal child tax credit benefitted millions of children through increased future earnings, better health and improved education outcomes. Passing LD 1544 loudly and clearly states that lifting folks out of poverty and putting money back in the hands of hard-working Maine families is a priority."
In 2021, Congress temporarily expanded the federal child tax credit and made it fully refundable. That expanded credit has since expired. Census data shows that child poverty dropped sharply last year, and that the expanded credit in combination with other relief efforts drove the child poverty rate to a record low of 5.2%. The Institute on Taxation and Economic Policy estimates that a refundable child tax credit could reduce child poverty in Maine by 12.3%, lifting roughly 3,500 Maine children out of poverty.
The bill faces further votes in the House and Senate.
Terry, who represents part of Gorham, is serving her fourth term in the Maine House and serves as the House Majority Leader. She is a chef and small business owner with more than 25 years of experience in the food service industry.