State continues to treat working families tax credit as a spending program instead of a revenue reduction (plus, remittances to date)

By: Emily Makings
9:57 am
May 24, 2023

This is the first year in which low-income Washingtonians can claim the working families tax credit (WFTC). According to the Department of Revenue (DOR), through May 15, the state has returned $83 million to 175,886 taxpayers.

The 2023 supplemental operating budget appropriates $221.0 million for WFTC remittances in FY 2023. (And the fiscal note for the 2021 bill had estimated that there would be 420,000 applicants for the program.) As enacted in 2021, people can apply through Dec. 31, 2023 for credits related to 2022 taxes. However, under 2SHB 1477, which was enacted this year, effective Jan. 1, 2024, people will be able to apply for the WFTC at any time within three years after the end of the tax year. As people learn about the program, the number of recipients and amount of remittances will surely grow given the long application window.

Meanwhile, as I wrote last year, DOR had requested that the state treat the WFTC as a revenue reduction rather than as an appropriation. Indeed, the statute describes the WFTC as “a refund of tax,” which would normally be considered a revenue reduction. DOR wrote in its budget request, “Treating WFTC refunds as a reduction of revenue will be significantly easier and use less staff time to administer than if appropriated.” The Legislature was apparently unconvinced. The 2023–25 operating budget appropriates $235.0 million in FY 2024 and $248.0 million in FY 2025 for WFTC remittances.

Categories: Budget , Tax Policy.
Tags: 2023-25