The Department of Revenue told the House Finance Committee that year two of Washington’s Working Families Tax Credit (WFTC) saw expanded take-up, faster processing and new delivery and outreach channels while the agency continues program improvements.

Steve Ewing, legislative and external affairs liaison for DOR, said the WFTC — a refundable credit enacted in 2021 for low- and moderate-income households modeled on the federal Earned Income Tax Credit — has an estimated 350,000 eligible households in Washington. DOR reported year‑over‑year increases from 2023 to 2024 of about 22% more applications refunded and 28% more dollars refunded. DOR also reported that 80% of refunds in year two went to households with children and that the average refund was about $750.

Why it matters: The WFTC directly channels state funds to lower-income households and is part of the legislature’s goals to reduce the regressivity of state and local taxes, promote racial equity and augment household stability. DOR said improvements shortened processing times (about two-thirds of refunds issued in under 30 days in year two) and expanded delivery options (prepaid debit cards in addition to checks and direct deposit).

Details and committee discussion

- Application and outreach: Applications can be submitted by paper, DOR’s MyDOR portal, or through modernized e-file (MEF) tax-preparation vendors; DOR added four MEF vendors in year two and will onboard TurboTax for the 2025 filing season.
- Legislative changes and retroactivity: House Bill 1477 (2023) expanded eligibility (including married-filing-separately filers) and made the credit available for the three years prior to the application year; DOR reported about 18,000 retroactive applications and roughly $13 million additional refunds tied to that expansion.
- Accessibility and outreach: DOR awarded $5 million in community outreach grants, partnered with 27 organizations and coordinated mailings with sister agencies (DSHS, HCA) to reach potential applicants. DOR added Spanish written correspondence and prepaid debit cards to reduce check-cashing friction; DSHS and HCA mailed large batches of outreach notices on DOR’s behalf.
- Data and operations: DOR noted that administering an income‑style refundable credit in a non‑income‑tax state poses data limitations relative to income-tax states; DOR emphasized efforts to improve data matching, vendor onboarding and automated processing.

Committee questions

Vice Chair Chapala Street and other members asked about refund averages and eligibility rules; DOR staff clarified the credit’s maximum refund levels by family size and age constraints for filers without qualifying children (aligned with federal EITC age rules). Representative Cindy Jacobson asked about refunds to ITIN holders; DOR said roughly 9% of refunds in 2024 went to households with at least one ITIN holder, often independent contractors or self-employed workers who use an ITIN to file federal returns.

Next steps

DOR is working to integrate the WFTC into the IRS Direct File pilot and to have the credit fully incorporated by 2026; TurboTax onboarding and MEF vendor expansion will be available for the 2025 filing season. DOR told the committee it will continue outreach and program enhancements.