AUGUSTA - Rep. Mo Terry, D-Gorham, introduced legislation Thursday before the Legislature's Taxation Committee that would establish a state refundable child tax credit, expanding the tax credits available for parents and other households with dependents.
LD 1544 would replace Maine's existing dependent exemption tax credit with a new child tax credit. In doing so, it would remove minimum income requirements, making it available to the lowest income Mainers with dependents. The current dependent exemption tax credit is not refundable, meaning that in order for a family to qualify, they must make enough money to have taxable income. The new credit would also increase the annual amount from $300 to $350 per dependent and index that credit to inflation.
"Creating a new child tax credit will provide direct relief to hard-working Maine families throughout our state," said Terry. "Currently, one in 10 Mainers are facing hunger, including one out of every six children. Providing families with this tax credit can help us lower the rates of food insecurity, reduce child poverty and help more families pay their bills and make ends meet."
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.
"Expanding the child tax credit will help kids throughout their whole lives, supporting higher educational attainment, better health, and higher earnings as adults," said Hannah Hudson, policy and communications manager for the Maine Primary Care Association. "This is a targeted policy to help Maine families build economic security that will make a positive difference for kids and, in the end, benefit us all."
The measure also received support from the Maine Council on Aging, Preble Street, Maine Community Action Partnership, Maine Council of Churches and Maine Center for Economic Policy.
The committee will hold a work session on the bill in the coming weeks.
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.
Contact:
Brian Lee [Terry], c. 305-965-2744