Public Assets Institute > Blog > Vermont Child Tax Credit: Good for kids, good for the economy

Vermont Child Tax Credit: Good for kids, good for the economy

Last week the Vermont House passed a child tax credit bill. If the legislation becomes law, it would go a long way toward helping over 34,000 families with children, especially the lowest income households, meet their basic needs.

The bill, which creates a $1,200 refundable credit beginning this year for kids six and under, is modeled on the expanded 2021 federal child tax credit, which was refundable and paid in monthly installments. A refundable credit ensures that families with no or low earnings get the full credit.

The House-passed state credit wouldn’t be paid monthly initially. Families would receive two payments in 2023, and the bill requires the Tax Department to look into how payments could be made monthly after that.

The extra money from the federal credit helped low-income families cover their basic needs last year. A national survey found that families with household incomes below $25,000 a year spent the monthly payments on food, utilities, clothing, housing, and school costs. And for half of Vermont kids living in poverty, the credit was enough to raise them above the poverty line—at least in 2021.

Public Assets’ State of Working Vermont 2021 shows how the federal and state response to the pandemic—the greatest government response to a crisis since WWII—improved the lives of many Vermonters. Establishing a Vermont child tax credit is one important way that the state can use what we’ve learned during the pandemic to reduce poverty and its harmful effects on children and families.

And lawmakers should continue to apply what we’ve learned from the COVID response by focusing on meeting people’s needs. It has the added benefit of strengthening the state’s economy at the same time.

Posted by Julie Lowell on February 15, 2022 at 11:56 am

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