Raising kids in Maine certainly comes with a hefty price tag.
In recent years, the costs of child care have surged, leaving many families feeling the pinch when it comes to essentials like food and gas. Because of this, it’s become really important for some Maine families to utilize available state and federal assistance programs aimed at helping families manage these costs.
Here’s a brief overview of some tax benefits and subsidies designed to help parents stay ahead financially.
Trump Account
Back in July, President Trump enacted a tax law that introduced a new government-funded child credit initiative, known as the Trump Account. These accounts became available recently.
Parents can register through the Trump Account App or the IRS platform, which requires basic info like identification and Social Security numbers.
By opening a Trump Account, parents of children born in early 2025 or later can receive $1,000 from an investment fund tied to the performance of the S&P 500—one of the main indices in the stock market.
This initial $1,000 comes from the U.S. Treasury, and the funds are automatically invested in an S&P 500-linked fund. Parents also have the option to contribute up to $5,000 each year. The Treasury has indicated that more investment avenues may be introduced in the near future.
The account remains under the parents’ management until the child turns 18. At that point, it becomes the child’s and can be accessed as needed, though typical IRA tax rules will apply. This money could also potentially help cover college or vocational training expenses. Additionally, there’s the Alfond Grant, which benefits all children born to Maine residents since January 1, 2013.
The Alfond Scholarship Foundation invests funds on behalf of these children, enabling parents to open a related education savings account alongside the initial $500 contribution.
Child Tax Credit
The legislation that established the Trump Account also made the child tax credit both permanent and increased its amount. Experts estimate that these federal tax reductions will help lift over 4 million people out of poverty by 2024.
Parents can claim this tax credit by submitting an additional form with their annual tax return.
For families with at least one child aged 16 or younger, the current maximum credit stands at $2,200 per child, which is adjusted each year for inflation. Essentially, this program serves as a tax credit to offset any unpaid income taxes, with any leftover amounts returned to families as refunds.
New eligibility criteria have also been created, supported by Congressional Republicans. As a result, nearly 20 million children might become ineligible for these credits if their family lacks a parent with a valid Social Security number or if their income falls too low. Parents can check their eligibility on the IRS website.
Maine is among several states that offer a state-specific child tax credit, with over 150,000 households currently benefiting. Applications can be submitted as long as they align with similar claims under federal tax relief.
Families can receive $310 for each eligible child, and $610 for those under the age of 6, with amounts adjusting for inflation.
Garrett Martin, who leads the Maine Economic Policy Center, cautions that linking benefits to the tax system may not always be the best approach. While both state and federal child tax credits can lift families out of poverty, he argues that real solutions come from well-resourced public services.
He also mentioned that temporarily allowing monthly payments of the federal child tax credit—rather than just an annual lump sum during the pandemic—created a significant impact. A study found that reverting back to annual payments caused about 4 million children to fall back into poverty.
Both state and federal child tax credits will phase out for single filers making above $200,000 and joint filers earning over $400,000.
Childcare Subsidy
Maine has a childcare affordability initiative that subsidizes costs based on a sliding scale.
The state provides reimbursements to eligible childcare providers, while families contribute between 1% and 10% of their income, depending on their earnings. Families can join a waiting list to check their eligibility; those earning up to 125% of the state’s median income can apply.
Martin believes these kinds of direct, ongoing subsidies could be effectively replicated in other areas. They could help families budget better.
However, he noted that demand for this program far exceeds its funding.
As of March, 888 providers were approved for this childcare payment assistance, aiding 3,307 children across 2,067 families, as reported by the state’s Department of Children and Family Services.
This represents only about 7% of eligible children statewide, and nearly 600 families were on the waiting list as of this spring.
