Washington House OKs bill expanding tax credit for low-income families

A bill that would expand a tax credit for the state’s low-income workers and families passed the House earlier this week, with an amendment that would ensure the exemption is available to eligible taxpayers for the first time.

The bill passed the Democratic-led chamber Tuesday on a bipartisan 94-2 vote and now heads to the Senate for consideration, The News Tribune reported.

The state tax exemption was created in 2008, but has never been funded. 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 aim is to help residents who end up paying a disproportionate amount of their income in taxes.

"Working families are the backbones that keep our communities strong," bill sponsor Rep. My-Linh Thai, D-Bellevue, said during floor debate. "Our economy must support them the way they support us."

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A fiscal note from the state Department of Revenue estimates it would pay out $250 million through mid-2023 under the proposal, and that the measure would apply to 420,000 taxpayers.

Under current law, the Legislature has to approve the exemption in its two-year budgets before taxpayers can claim it. An amendment from Republican Rep. Drew Stokesbary removed that requirement Tuesday, aligning it with other tax exemptions.

There had been some trepidation among Republicans about "expanding the promise before funding the promise," Stokesbary said. He sees the amendment as "converting that promise into payments."

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. The bill that passed the House replaces that with a base amount ranging from $500 to $950, depending on the number of children a taxpayer has. The base amount phases out as income levels increase, with a minimum credit of $50.

For tax year 2020, a single taxpayer with no kids could have earned up to $15,820 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 $56,844 in 2020, according to a nonpartisan analysis.

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