Ways & Means advances bill expanding child tax credit, boosting EITC and raising retirement-exemption thresholds

The House Ways & Means Committee on an afternoon vote advanced a committee bill (Drafting Request 25970) that would expand three state tax benefits: raise the child tax credit age eligibility by one year, increase the percentage of the federal earned-income tax credit (EITC) available to filers without dependents, and raise adjusted gross income (AGI) thresholds used to determine partial exemptions for Social Security, Civil Service Retirement System (CSRS) and military retirement income. The committee approved the measure on a roll-call vote of 10-1.

Why it matters: The committee’s Joint Fiscal Office estimate, agreed with the Department of Taxes, puts the combined incremental cost of the three changes at about $9.6 million in foregone general-fund revenue annually. The changes are designed to deliver additional tax relief to families, childless workers and older Vermonters receiving retirement income but would reduce state general-fund receipts if enacted.

Joint Fiscal Office fiscal summary and attribution Patrick Titterton, Joint Fiscal Office, briefed the committee on the fiscal note. “These three changes put together would result in about $9,600,000 in foregone general fund revenue annually,” Titterton said. He told members the package is composed of three separate components: the child tax credit (CTC) age increase, an increase in the state EITC percentage for claimants without dependent children, and the $5,000 increases in AGI thresholds used to determine eligibility for partial exemptions on Social Security, military retirement and CSRS income.

Breakdowns in JFO estimates: Titterton said the expanded child tax credit portion is estimated to account for about $4.5 million of the annual revenue loss; the EITC increase for filers without dependents is estimated at about $3.0 million; and the AGI-threshold increases for retirement-related exemptions are estimated at about $2.1 million. He also noted existing baseline expenditures: under current law the child tax credit tax expenditure is about $24.0 million (roughly 21,000 Vermont tax returns claimed it in JFO’s fiscal-year‑2026 estimate), and the EITC tax expenditure is about $27.0 million (JFO estimates about 33,000 filers will claim it in FY26). With the committee changes, JFO projected the CTC tax expenditure would rise to about $28.5 million and the EITC total to about $30.0 million annually.

Retirement exemptions and distributional effects: On the retirement-income side, Titterton told the committee the proposed AGI-threshold increases (single threshold up $5,000, married threshold up $5,000, with the $10,000 phaseout band preserved) would cause roughly 2,400 additional Vermonters to move from partial to full exemption and about 5,200 additional filers to newly qualify for a partial exemption — about 7,500 taxpayers in total gaining added relief. JFO estimated just under 30,000 Vermont tax returns currently exempt some or all retirement income and put the current tax-savings figure near $8.2 million; with the proposed changes JFO estimated about $11.0 million in state-level tax savings for those filers.

Discussion, procedural issues and military-retirement question Committee members pressed staff on statutory interactions and whether approval here would affect a separate pending proposal to fully exempt military retirement income. Committee counsel and staff explained that the committee bill as drafted increases the AGI thresholds and retains the partial-exemption structure; the governor’s recommended budget had proposed a full exemption for military retirement pay (which would remove the thresholds), but the committee’s language does not enact that full exemption. Members asked whether acting here would bar later action on a separate military-retirement exemption. Staff explained the House’s procedural rules and the “substantial negation” concern, noting committee reports and Senate amendments may change language later in the process; committee discussion referenced House rules and precedent about substantial negation and committee-report exceptions. The transcript included staff readings of the relevant House-rule guidance during that exchange.

Vote and next steps A motion to advance the committee bill was made and the clerk called the roll. The committee vote was 10 in favor, 1 opposed, 0 abstentions. The clerk recorded the roll-call responses: Representative Brandy (yes), Representative Burkhart (yes), Representative Feltes (yes), Representative Higley (no), Representative Fulgham (yes), Representative Kimball (yes), Representative Masland (yes), Representative Odey (yes), Representative Wazosak (yes), Representative Canfield (yes), Representative Kornheiser (yes). The committee’s approval sends the committee bill to the Senate for further action; members and staff noted the bill is likely to be used as a financing vehicle and could be amended further in the Senate or on return to the House.

Closing and committee planning Committee leadership signaled other bills to be considered later in the day and reminded members of scheduled follow-ups. Staff asked members to direct any last technical questions to Joint Fiscal Office and counsel before the committee left for lunch.

Votes at a glance: committee bill (Drafting Request 25970) — outcome: advanced from committee (approved) Motion: Move to vote on the committee bill (committee bill as handed; Drafting Request 25970, expansion of existing income tax credits) Mover/Second: not specified in the committee transcript Vote tally: Yes 10, No 1, Abstain 0 Outcome: approved (committee vote to report the committee bill to the floor)

Sources: Committee transcript, Joint Fiscal Office presentation (Patrick Titterton) and in-meeting questions to staff and counsel.