State Senate approves expansion of low-income tax credit

The bill passed the Democratic-led chamber on a bipartisan 47-2 vote and now heads back to the House.

By Rachel La Corte / Associated Press

OLYMPIA — The Washington Senate on Sunday approved a bill that would expand a tax credit for low-income workers and families that would start paying out benefits for the first time in 2023.

The bill passed the Democratic-led chamber on a bipartisan 47-2 vote and now heads back to the House, which passed the bill last month but will need to take a final vote on whether or not to concur with changes made in the Senate.

“Providing relief for families who need it the most was important before this pandemic, and it is even more important now that the persistent inequities in our system has been exposed because of Covid,” said Democratic Sen. Joe Nguyen.

“This is more than just good policy, it’s what it looks like when we put people before politics,” he said.

The state tax exemption was created in 2008, but has never been funded. Democratic leaders in both the House and Senate have allocated money to the program in their recent budget proposals.

It is modeled in part after the federal Earned Income Tax Credit for low-income individuals and families and uses income qualifications from that program and is meant to offset the state sales tax.

The proposed law is currently projected to pay out $250 million to 420,000 taxpayers in 2023, the first year benefits will be paid out. That amount jumps to $536 million in the next two-year budget cycle that ends mid-2025.

Under current law, the amount of the state benefit is 10 percent of a person’s credit from the federal program or $50, whichever is greater.

Following an amendment accepted on the Senate floor, the proposed changes to the law replaces that with a base amount ranging from $300 to $1,200, depending on the number of children a taxpayer has. The base amount phases out as income levels increase, with a minimum credit of $50. The initial bill that passed the House had a range of $500 to $950.

For tax year 2021, a single taxpayer with no kids could have earned up to $15,980 and still be eligible for the minimum $50 rebate. For a married couple with more than two kids, that maximum qualifying income would’ve been $51,463 in 2021, according to a nonpartisan analysis.

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