In 2008, the Legislature passed the WFTR. This rebate works like a state-level EITC as it is calculated as a percentage of a family’s federal EITC benefit. Because the Legislature never appropriated the necessary funding, the law was suspended in 2010 before implementation could take place.
WFTR and Washington EIC
Our WFTR would provide an additional benefit to low- and moderate-income families, worth 10 percent of their federal EITC benefit. The Department of Revenue estimates this would help more than 500,000 families, mostly in rural and economically struggling areas of the state. The department estimates that the average additional state benefit to a Washington family would be $223.
Washington Earned Income Tax Credit
In 2008, Washington state became the first state without an income tax to implement an earned income credit. Washington state legislature recognized the burden that state sales taxes were placing on low income families and in order to help alleviate this burden, the state legislature enacted the EITC program for sales taxes. The program, once fully implemented, will allow low income families to receive a refund of sales taxes equal to ten percent of their federal EITC amount or $50, whichever is greater.
What is the WFTR?
The WFTR will be calculated as a flat percentage of the EITC. A rebate set at ten percent of the federal EITC would provide a tax break of up to $500 for lower income working families. In total it would return over $60 million annually to working families in Washington.
Other States with Earned Income Tax Credit
Twenty three states (including the District of Columbia) have a state EITC that is administered as a percentage of the federal credit. In these states, piggybacking on the federal EITC has proven to be a very effective way to provide additional support to lower income working families. Washington is the first state in the nation without an income tax to enact an EITC and will be a model for other states.