Vermont lawmakers hear testimony on expanding earned‑income and child tax credits

Members of the Vermont House Ways & Means Committee heard two hours of testimony April 16 on proposals to expand the state's earned‑income and child tax credits, with witnesses saying the credits are a high‑impact tool to reduce child poverty and household financial instability.

"Income tax credits and child tax credits are a huge tool in trying to help people maintain stability once they have it," said Amy Rose, policy director for Voices for Vermont's Children, in testimony to the committee.

Advocates described three parallel priorities: increase credit amounts, broaden eligibility and improve access and outreach. Julie Lowell, economic security policy and outreach director at Public Assets Institute, told the panel that tax credits are part of a broader set of supports that families need but said the credits have shown measurable effects since the pandemic.

"During this time period . . . there were 3,000 fewer children in Vermont living in poverty because of these credits," Lowell said, citing a 2021–2023 average she presented to the committee.

Witnesses pointed to research linking modest increases in cash income to reductions in child protective‑services involvement: Rose cited work suggesting a $1,000 increase through the EITC is associated with an 8 to 10 percent reduction in child‑protection system involvement for low‑income single‑mother households. Lowell and Rose also said families receiving credits typically spend funds on basic needs such as food, utilities, clothing and housing.

Panelists recommended specific changes now before the Legislature: raise the state EITC closer to the federal level (testimony referenced increasing the state percentage from the current 38 percent to 55 percent for some filers), extend eligibility for younger workers (some witnesses urged including 18–24‑year‑olds), and expand the Vermont child tax credit to cover more children, including proposals to extend the age threshold and to make the credit refundable for certain groups such as former foster youth and children with disabilities.

Witnesses also pressed for operational steps to increase uptake. Lowell described outreach and filing barriers, including that many low‑income filers use paid preparers: "In 2022, about 40 percent of child tax credit recipients use a paid provider," she said, and suggested direct‑file options and better coordination between the Department of Taxes and community organizations.

Committee members asked about budget and administrative effects. Karen Lafayette, legislative liaison for the Vermont Low Income Advocacy Council, told lawmakers that refundable credits ultimately get spent locally: she cited a Community Action Agencies'VITA figure showing about $4.7 million in refunds and credits handled by the program in a recent filing year, with roughly $2.6 million attributable to EITC and child‑credit refunds at that site.

The committee did not take legislative votes on tax credit bills during the session. At the start of the meeting the chair asked whether members were comfortable proceeding with a planned vote later in the day on S.27 (medical debt legislation) without a new 24‑hour warning; members said they were comfortable proceeding, and the chair said the committee would vote on S.27 later that morning.

The testimony underscored trade‑offs lawmakers face: advocates framed tax credits as efficient, readily delivered cash that can be combined with other policy tools such as higher wages, Medicaid, housing supports and child care subsidies. Several legislators said they wanted more integrated data and analysis that shows both household impacts and community economic multipliers before making final budget decisions.

The committee scheduled further work on tax credits and related bills in coming weeks.