It’s no secret the 2021 legislative session was historic—not only because of the public safety, affordable housing, and climate action legislation, but also because of the flexible cash policies like those included in the Working Families Tax Credit (WFTC). The Legislature established the WFTC to support families in meeting their essential needs and provide families with the autonomy to decide for themselves how to best reduce financial strain.

Nearly fifteen years ago, the Legislature enacted a state-level benefit program called the Working Families Tax Credit that was based, in part, on the federal Earned Income Tax Credit (EITC) program. The state-level tax exemption program was modeled as a sales and use tax remittance program.

In the last legislative session, the Legislature nearly unanimously passed HB 1297, a bi-partisan bill, which expands eligibility and funding for the WFTC program. Now, individuals that file taxes using an Individual Taxpayer Identification Number in lieu of a social security number may also qualify for the WFTC program. Further, the legislation expands the definition of a qualifying child to include a child with an Individual Taxpayer Identification Number in lieu of a Social Security Number. HB 1297 removes the requirement that a person must have been granted a federal EITC to qualify for WFTC, and eliminates the maximum remittance of ten percent of the credit granted from the EITC.

Individual Taxpayer Identification Number: an identification number used by the Internal Revenue Service in the administration of tax laws. It is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot obtain a social security number.

The new base remittance amount for the WFTC program includes:

• $300 for eligible persons with no qualifying children;
• $600 for eligible persons with one qualifying child;
• $900 for eligible persons with two qualifying children; or
• $1,200 for eligible persons with three or more qualifying children.

This program, and its expanded benefits, are estimated to have widespread positive impact and significantly reduce financial hardship across the state. This means that more than 21,000 households (or about 62,000 adults and children) could move above the federal poverty level with participation in the program.

Federal poverty level: also known as the “poverty line,” is an economic measure used to decide whether the income level of an individual or family qualifies them for certain federal benefits and programs. The Department of Health and Human Services updates its federal poverty guidelines, illustrating the set minimum amount of income that a family needs for food, clothing, transportation, shelter, and other necessities, once a year, adjusted for inflation. For a family or household of four persons, the poverty level for 2021 is $26,500.

Eligible taxpayers may apply to the program via the Department of Revenue (DOR) beginning in 2023. Beginning in 2024 and annually thereafter, remittance amounts will be adjusted for inflation based on changes in the consumer price index.

To prepare for the program launch, DOR is creating a Community Outreach Advisory Committee to help inform and guide the implementation of a robust outreach strategy. DOR will also conduct the rulemaking process, beginning in early November. For more information about the community outreach advisory committee or rulemaking process, click here.