A bill expanding eligibility for the state Working Families’ Tax Exemption and increasing the remittance of the credit is scheduled for a Senate hearing and committee vote later this week.

HB 1297, sponsored by Rep. My-Linh Thai (D–Bellevue), expands eligibility for the working families’ tax exemption (WFTE) to include resident and nonresident immigrants, and increases the remittance amounts for people qualifying for the program.

The current WFTE is a sales and use tax remittance program; it has never been fully funded by the Legislature since it was first passed in 2008. To qualify for the current WFTE, a taxpayer must be a Washington resident for at least 180 days in the tax year that the exemption applies, must have paid state and local sales and use taxes, must have received a federal earned income tax credit (EITC), and must apply to Department of Revenue (DOR) for a remittance.

The bill changes the program by permitting those who file taxes using an Individual Taxpayer ID Number (ITIN) to apply for the exemption. It also removes the requirement that the person receive a federal EITC to apply for WFTE. Only U.S. citizens and resident aliens with social security numbers can currently qualify for the EITC. The changes to the WFTE program would allow certain resident and nonresident aliens, recent immigrants, and their families, who file federal taxes using an ITIN instead of a social security number to qualify for the WFTE.

In addition to the eligibility expansion, HB 1297 increases the base remittance amounts for WFTE applicants, sets an income schedule for reducing remittances based on particular income levels, and regularly adjusts the new base remittance amounts for inflation starting in 2024. A floor amendment was adopted before the bill left the House that removes the requirement that the WFTE be approved in the state operating budget prior to any claims being made.

Passage of the bill assumes the Legislature will provide the funding for implementation. Per the fiscal note, the program is estimated to cost the state approximately $250 million in the 2021-2023 biennium and $536 million in the 2023-2025 biennium.

The bill passed the House with near unanimous support on a 94-2-2 vote on March 9. The bill is currently in the Senate Human Services, Reentry, & Rehabilitation Committee and is scheduled for a public hearing on Tuesday, March 16.

Dates to remember

HB 1297 is scheduled for a public hearing in the Senate Human Services, Reentry, & Rehabilitation Committee on March 16 at 1:30 pm. It is scheduled for a committee vote on March 18 at 1:30 pm.