Working Families' Tax Credit.
The Working Families' Tax Credit (WFTC) is a state program for low- to- moderate-income families that offers a partial credit against sales and use taxes paid in the form of a refund. To be eligible for credit payments, a person must:
There is no minimum or maximum age requirement for a person with a qualifying child.
The amount of the WFTC payment varies depending on the number of qualifying children in the household and the filer's income level. The minimum credit amount for all eligible persons that apply is $50. The maximum credit amount is as follows:
Beginning in 2024 and annually thereafter, credit amounts will be adjusted for inflation based on changes in the consumer price index.
Qualifying income levels are based around the maximum adjusted gross income for the federal EITC, which changes annually. The maximum credit amount for the WFTC is reduced by varying percentages depending on income levels. The Department of Revenue (DOR) adjusts the rate of credit reductions annually to maintain the minimum credit being received at the maximum qualifying income level. The rates of credit reduction also vary based on the number of qualifying children.
To receive a credit, eligible persons must apply to the DOR. The DOR has authority to adopt rules necessary to implement and administer the program.
Applications for the program open February 1, 2023.
Tax Preference Performance Statement.
State law provides for a range of tax preferences that confer reduced tax liability upon a designated class of taxpayer. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Currently, Washington has over 650 tax preferences, including a variety of sales and use tax exemptions. Legislation that establishes or expands a tax preference must include a Tax Preference Performance Statement that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference.
All new tax preferences automatically expire after 10 years unless an alternative expiration date is provided.
Joint Legislature Audit Review Committee Review of the Working Families' Tax Credit.
The JLARC is required to review the WFTC in 2028 and every 10 years thereafter. If a review finds that the WFTC does not provide meaningful financial relief to low-income and middle-income households, then the credit expires at the end of the calendar year two years after the final JLARC report containing the finding is adopted.
Individuals with no qualifying children can qualify for the WFTC if they are 18 years of age or older. The amount of credits available for this expanded age population is subject to appropriations.
As part of its tax preference performance review, JLARC is required to provide written notice of the expiration date of the WFTC to the DOR, the Chief Clerk of the House of Representatives, the Secretary of the Senate, the Office of the Code Reviser, and others as JLARC deems appropriate.
The act is not subject to the 10-year automatic tax preference expiration.
The substitute bill makes technical language changes and removes the requirement that JLARC provide notice of expiration to "affected parties." The substitute bill also makes credits that are available to the expanded age population subject to appropriations.
(In support) Outreach for the working families tax credit program is critical since it is a first time program. This will be the first time the state is sending a check to working people in the state who bear too much of our tax burden. The age restriction is problematic, because if you are 24 years old with a low income supporting yourself, you will not qualify, while a 25 year old in the same position will qualify. Young adults and older folks are the most financially unstable. Young people are barely making ends meet, so extra cash is helpful for keeping up with basic costs of living. Students often face basic needs insecurity, particularly students of color. Young people between the ages of 18-24 experience the highest rate of hunger in the state. There are limited job opportunities and institutional barriers that magnify this issue. Families receive wide support, while families without children are often left behind. From ages 18-24 people are starting their working life, and it's difficult especially without family support. This bill will be very helpful for young people. This program offsets the inequity of our tax system on the lowest income person. More adults 65 and older are working now than any time in history, yet poverty for this age group is increasing.
(Opposed) None.