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Montana

State Income Taxes and Credits


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Most states levy state income taxes, but the tax burden on low-income families varies significantly depending on where they live. A growing number of states offset this burden with state earned income tax credits and/or state child and dependent care tax credits. These credits are typically based on provisions in the federal income tax code, but states make all decisions regarding eligibility and benefit levels.

Federal decisions are italicized.

Income Tax Liability

Tax threshold

Income tax threshold for single-parent family of 31$9,600/year (2007)
Income tax threshold for two-parent family of 41$11,600/year (2007)

Tax burden

Income tax burden for single-parent family of 3 at 100% FPL1$146/year (2007)
Income tax burden for two-parent family of 4 at 100% FPL1$217/year (2007)

State Earned Income Tax Credit (EITC)

Income eligibility criteria

Income eligibility rules same as federal EITC2No state credit (2008)
Income limit for 1-parent family with 2 or more qualifying children2No state credit (2008)

Benefit level

Refundable credit available2No state credit (2008)
Percent of federal EITC2No state credit (2008)
Max benefit for family with 2 or more qualifying children2No state credit (2008)

State Child and Dependent Care Tax Credit

Income eligibility criteria

Income eligibility rules same as for federal credit3No (2007)
Income limit for family with 2 or more qualifying children3$25,200/year (2007)4

Eligible expenses

Child care expenses eligible by same rules as federal credit5No; eligible expenses include expenses for care of children under 15 yrs that allowed claimant to work, up to a max of $2,400 for 1 child ($3,600 for 2, and $4,800 for 3 or more), reduced by half the amount of the tax filer's income above $18,000. (2007)

Benefit level

Refundable credit available3No (2007)
Benefit structure3Deduction of eligible expenses (2007)6
Max benefit for family with 2 or more qualifying children3$180/year (2007)7
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Data Notes and Sources

Data on State Income Taxes and Credits were compiled by NCCP in June 2008. Some state policy decisions may have changed since these data were collected.

  1. Calculations include income tax credits that are available to all low-income families in the state, such as state earned income tax credits.
    Jason A. Levitis and Andrew C. Nicholas, The Impact of State Income Taxes on Low-Income Families in 2007, Center on Budget and Policy Priorities, 2008.
  2. State EITC Online Resource Center, http://www.stateeitc.com (accessed June 2, 2008); with additional information from NCCP.
  3. Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love, Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, National Women's Law Center, 2006; with updates from National Women's Law Center, 2008 Supplement to Making Care Less Taxing, 2006.
  4. Figure reflects limit for family with 2 qualifying children; income limit for 3 or more children is $27,600 per year.
  5. These include care expenses for children under 13 years that allowed the claimant to work or look for work, up to a maximum of $3,000 per year for one child and $6,000 per year for two or more children. Claimed expenses may not exceed claimant's earnings, or, in two-parent families, the earnings of the lesser-earning parent; full-time students are treated as having $250 per month in earned income (or $500 per month in families with two or more children).
    Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love, Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, National Women's Law Center, 2006; with updates from National Women's Law Center, 2008 Supplement to Making Care Less Taxing, 2006.
  6. Tax deductions are subtracted from a claimant's income before calculating taxes, while credits are subtracted from the claimant's tax liability after taxes are calculated. Montana's top tax rate is 6 percent for tax filers with 1 child, 5 percent for filers with 2 children, and 3 percent for filers with 3 or more children.
  7. Figure reflects the maximum benefit for a family with two qualifying children; the maximum benefit for a family with three or more children is $144 per year; the benefit cannot exceed the claimant's tax liability.