The expanded child tax credit expired at the end of 2021, but Vermont is planning to issue its own credit to families with young children.
According to VTDigger, the Vermont House of Representatives recently approved a $50 million tax cut package that would send $1,200 per child to most families with children who are aged six and under. Vermont’s child tax credit is modeled after the federal child tax credit and would help about 50,000 children.
Under the American Rescue Plan of 2021, advance payments of up to half the 2021 child tax credit were sent to eligible taxpayers. Most eligible families received monthly payments of $250 or $300 per child from July through December. Families can still claim these payments or the remaining half of the CTC when filing their 2021 taxes.
Lawmakers say that they are aiming to bring more people into the state and reverse demographic trends, VTDigger reported. Rep. Scott Beck said the main reason he’s supporting this bill was that it addressed “the biggest problem facing the state.”
“We don’t have enough kids, our birth rate is too low. We are far too old. And this strikes directly at that issue,” he said.
VTDigger noted that parents with young children are less likely to have higher incomes. Research also suggests that cash payments to low-income mothers could even positively impact brain development in babies.
“By passing the Vermont Child Tax Credit, we’re communicating clearly and unequivocally here that Vermont cares about kids and families — that this is the place where you can make it work,” Rep. Emilie Kornheiser said in a floor speech on Feb. 8.
VTDigger reported that the benefit starts to phase out for taxpayers making $200,000 a year, regardless of filing status.
“H.510 will provide needed relief for Vermonters to make payments on their mortgage or rent, buy food and basic essentials, pay for child care, and so much more,” said Speaker of the House Jill Krowinski, per Vermont Business Magazine.
The bill is now on its way to the Senate, according to WCAX, where it’s expected to be picked up this week.
More From GOBankingRates