Valley News – Vermont House and Senate lawmakers approve child tax credit deal

MONTPELIER — House and Senate lawmakers reached a final deal on HB 510, a $40 million tax cut package that would include a new refundable child tax credit for Vermont, and moved quickly Thursday to send the bill to Governor Phil Scott’s office.

The final compromise between the two chambers would send Vermonters $1,000 per child 5 or younger. Households earning $125,000 or less would qualify for the full credit; families claiming the credit would lose $20 for every $1,000 above the income threshold.

The credit would impact about 33,000 children in the state. The estimated cost to state coffers for this new credit alone would be $32 million.

The Senate approved the bill in a voice vote Thursday morning. The House responded in the afternoon by pushing HB 510 across the legislative finish line on a vote of 141-4.

The tax credit is modeled after the federal child tax credit, which Congress temporarily extended to $3,600 per child under age 6 during the pandemic for families earning $400,000 or less. The measure has been widely credited with reducing child poverty by around 30% nationally.

The expanded federal credit has since expired (though families who haven’t yet can still claim it for 2021). Democratic attempts to reinvigorate strong credit in the Build Back Better social spending program championed by President Joe Biden failed in the U.S. Senate after facing opposition from U.S. Sen. Joe Manchin, DW.Va.

The Vermont House passed a $48 million version of the tax credit in February that would have sent $1,200 to every family earning $200,000 or less for every child 6 and under. The Senate responded with a $1,000 appropriation with less than half that price — $22.5 million — that would have started phasing out for families earning more than $55,000 a year. The upper house bill would also have ended the tax cut after three years; the final compromise bill does not.

It is still unclear whether Scott would sign the measure. The Republican governor also wanted a big tax relief package this session, but he had offered to send tax cuts to a wider range of taxpayers.

With the final version of HB 510, lawmakers adopted versions of some of Scott’s proposals. The bill, for example, would create a deduction for all interest paid on student loans for taxpayers with incomes of $120,000 for single filers and $200,000 for married filers. It also expands the state working income tax credit very slightly and significantly expands the child care and dependent care credit. It also expands the income thresholds for the Vermont Social Security exemption by $5,000.

House Ways and Means representative Janet Ancel, D-Calais, said she believed the measure, if passed, would likely create the most generous state-level child tax credit in the country. . A total of 510 HBs would reduce the tax burden of about 70,000 people in the state, she added.

“In all my years here, this is the most significant tax relief program we have been able to provide Vermonters,” Ancel told his colleagues on the floor.

Scott has been pushing for years for Vermont to join other states in waiving military retirement benefits altogether, and has repeatedly stressed to lawmakers that it’s a top priority this session. HB 510 does not include such an exemption, although it does exclude $10,000 in military retirement pay — subject to income thresholds — which is well below the governor’s goal.

“The governor has not yet made a decision on the bill,” Jason Maulucci, Scott’s press secretary, said in an email. “He believes the Legislature has missed an opportunity to deliver broader and more impactful tax relief to Vermonters, as he proposed in January. However, he is fortunate that this year the legislature has come around to his view that tax relief is needed.

Almost all Republicans ultimately supported HB 510 when it came time to vote. But a few nonetheless spoke up to echo the governor.

Rep. Ken Goslant, R-Northfield, said he backed the measure because he wanted to help families with children – but said he was still disappointed with the partial military superannuation waiver.

“We could and should have done more for our veterans,” he said.

The bill would also increase annual renewal fees paid by investment companies on mutual funds from $1,500 to $1,650, which is expected to generate $3.6 million in additional revenue for Vermont.

Comments are closed.