Washington State sets 2023 working families tax credit refund amounts

On February 21, 2025, Washington State introduced Senate Bill 5771, a legislative proposal aimed at enhancing the Working Families' Tax Credit (WFTC) to provide greater financial relief to low- and moderate-income families. This bill seeks to address the growing economic pressures faced by these households, particularly in the wake of rising living costs and inflation.

The primary purpose of Senate Bill 5771 is to adjust the refund amounts associated with the WFTC, which is designed to support working families by reducing their tax burden. Under the proposed changes, the refund amounts for eligible individuals will be structured as follows: $300 for those without qualifying children, $600 for families with one qualifying child, $900 for two qualifying children, and $1,200 for families with three or more qualifying children. These amounts are set to take effect for the calendar year 2023 and beyond.

Additionally, the bill introduces a phased reduction of these refund amounts based on income levels. For instance, individuals with no qualifying children will see their refund decrease by 18% for every dollar earned above a specified threshold, while those with one, two, or three or more qualifying children will experience similar reductions at varying rates. Notably, if the calculated refund is less than $50, it will be adjusted to a minimum of $50, ensuring that families receive some level of financial support.

A significant amendment proposed in the bill is the introduction of an additional $300 refund for eligible individuals who have rented or leased their primary residence in Washington for at least 183 days during the year. This provision, set to begin in 2026, aims to further assist families who may struggle with housing costs, thereby addressing a critical issue in the state's ongoing housing affordability crisis.

The introduction of Senate Bill 5771 has sparked discussions among lawmakers and advocacy groups. Proponents argue that the bill is a necessary step toward alleviating financial strain on working families, particularly in light of the economic challenges exacerbated by the COVID-19 pandemic. Critics, however, express concerns about the long-term sustainability of such tax credits and their potential impact on state revenue.

The implications of this bill extend beyond immediate financial relief. Economically, it could stimulate local economies by increasing disposable income for families, which may lead to greater consumer spending. Socially, the bill aims to reduce poverty levels and improve the quality of life for many families in Washington, fostering a more equitable community.

As the legislative process unfolds, stakeholders will be closely monitoring the bill's progress and its potential impact on Washington's families. The outcome of Senate Bill 5771 could set a precedent for future tax relief measures and shape the state's approach to supporting its most vulnerable residents.