Tax Credits: a Powerful Anti-Poverty Tool

Expanding Vermont tax credits and increasing eligibility and access in 2025 will help people in Vermont bounce back from tough economic times and provide a stronger financial foundation.  Vermont statute requires that our spending and revenue policies address Vermonters needs for health, housing, dignified work, education, food, social security, and a healthy environment. Anti-poverty tax credits help the state keep its promises by increasing financial stability for Vermont families so they can begin to meet their basic needs, live with dignity, and build stronger communities.

The Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) help the lowest-income Vermont families fill the gap between income and expenses by providing cash when they file their taxes.  During the pandemic, temporarily expanded federal tax credits helped bring 10,000 people out of poverty. Unfortunately, when these credits ended many Vermonters were left worse off. Increasing Vermont tax credits, and expanding eligibility and access to them, helps people cover these costs.

Solutions:

1. Increase the EITC, and create a new foster youth credit

• Increase the state EITC to 55 percent of the federal EITC for filers with children; to 100 percent for filers without children.*

• Create a new $1,000 refundable credit for former foster youth, ages 18 to 26.

2. Broaden eligibility

• Extend Vermont’s CTC to families who have a child of any age with a disability.

• Expand refundable tax credits to workers under the age of 25 and over 64 without children.

3. Increase accessibility, maximize benefits

• Create state practices to collect and publish annual data about who receives the credits.

• Coordinate state outreach to ensure that every eligible Vermonter receives the credits.

• Clarify in statute that residents without income are eligible for the credits.

• Provide the credits whether or not recipients have other state debts.