A new $1,000 child tax credit scheme for families with kids under five years old will be rolling out in the state of Vermont after Republican Gov. Phil Scott signed House Bill 510 into law on Friday, May 27.
The state stimulus package will allow Vermont households earning less than $125,000 a year to receive the cash boost following the end of the federal child tax credit package during the pandemic.
According to Valley News, Scott, the Republicans, and the Democrats negotiated for months to arrive at a compromise for the new package. Initially, the House planned to disburse more than $50 million for child tax credit benefits. However, the Senate also proposed a $36 million stimulus package that includes major tax breaks for up to three years.
In the end, the legislators ended up with a $40 million budget where $32 million will go to child tax credit payments. This will allow Vermont to disburse the cash boost to more than 30,000 children.
Claiming Vermont's New Child Tax Credit
Vermont based this new child tax credit scheme on the previous federal benefit given to American families during the pandemic. However, stipulations in the fiscal notes of House Bill 510 show that families may claim the refundable tax credit when they file for taxes in the next financial year or by April 2023. Thus, they won't expect any form of monthly payments similar to the federal scheme.
Families earning a gross income over $125,000 but not over $175,000 may also file the claims if they have children under five years old. However, they will get $20 less per $1,000 if their income threshold exceeds the low-income bracket.
Vermont lawmakers approved legislation that would create a state child tax credit, an income tax deduction for student loan interest, and an income tax exemption for some military and civil service retirement income.
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Parents who will avail of the refund must keep any letters from the Internal Revenue Service when they file their taxes and claims in 2023. Additionally, the new package will prioritize relief for low-income families, caregivers, retirees, families with student loans, and families receiving military pensions.
House Speaker Jill Krowinski said in a statement that the new tax package is a major historic win for the citizens of Vermont.
"I'm proud we were able to pass legislation that will provide financial support to families and individuals across all 14 counties," Krowinski said, adding that the legislature will continue to ensure that communities will recover from the economic fallout of the pandemic stronger than ever before.
Food Insecurity Rising Without Federal Child Tax Credit
After the Biden government ended the monthly expanded child tax credit in December 2021, Children's HealthWatch reported that food insecurity increased among U.S. families by 12 percent, per The Ascent. Coupled with the rising prices of grocery items due to inflation, parents need to spend more to provide food on the table.
Thus, many Americans are still hoping for the return of the expanded child tax credit scheme under Biden's Build Back Better program to help cover the cost of food and basic needs. In the meantime, states like Vermont are stepping up where the federal government has failed by coming up with the state packages.
