There’s free money out there. Just sitting there. Waiting for you. Just fill out an application. The state will cut you a check. We’re serious. Do it.
Hundreds of thousands of eligible Washington families have not yet applied for the state’s new Working Families Tax Credit, which gives up to $1,200 to low-income families and individuals.
The tax credit, which went into full effect for the first time this year, aims to provide a cash boost to people at or near the bottom of the economic ladder, who, in Washington, pay a far greater share of their income in taxes than the wealthy. It’s one of two high-profile tax reforms passed by the state Legislature in 2021, part of an effort to make the state’s tax system fairer for those with less money.
Nearly 400,000 Washington families, about 1 in 7, are eligible for the new tax credit. But you have to apply. As of federal income tax day, about 153,000 taxpayers, just 38% of those eligible, had applied, according to the state Department of Revenue.
“Our job is to get out that megaphone, in our text messages and our emails and our carrier pigeons, and make sure that every family that is eligible actually makes an application for this program,” Gov. Jay Inslee said Tuesday at El Centro de la Raza in Beacon Hill.
Eligibility for the tax credit depends on income and family size. You must have lived in Washington for most of the year and you must fill out a federal income tax return to qualify. Anyone who made less than $60,000 in 2022 could be eligible for a refund from the state for anywhere from $50 to $1,200.
The median payment so far for the nearly 90,000 people who have received the tax credit is about $720.
“It’s a big deal for people, to put that kind of cash in people’s pockets,” Inslee said.
You can apply with either a Social Security number or an Individual Taxpayer Identification Number, so undocumented immigrants can apply and receive the tax credit.
Applications, which can be filled out at workingfamiliescredit.wa.gov, will remain open through the end of the year.
The program is modeled after the federal Earned Income Tax Credit, which gives money to low- and middle-income working families. There are 32 other states that also offer their own version of the EITC, but Washington is the only state without a state income tax to do so. That’s made administering the tax credit a little trickier.
Since Washington taxpayers don’t fill out a state income tax return, the state doesn’t have a direct pipeline to the IRS that would help automatically distribute the tax credit to everyone eligible, said Kevin Dixon, an assistant director with the state Department of Revenue.
So the state has set up a new division within the Department of Revenue to administer the credit and has allotted 82 full-time employees to run the program. The estimated cost to run the program is about $27 million for the upcoming two-year budget cycle.
The Department of Revenue had estimated that only about 40% of those eligible for the tax credit would receive it in the first year. Dixon said it looked like they may end up slightly above that figure, although the vast majority of people who apply for the credit are likely to do so around tax time, he said.
Joelle Craft, 45, lives in West Seattle with her three kids. She’s disabled and is dependent on gig work — pet sitting — for income. She recently moved in with family members to help ease the cost of living in the city.
“With the rising prices of foods and rent, it’s been really hard to cover expenses,” Craft said.
She qualified for the maximum tax credit this year, $1,200.
“This tax credit means that for one month,” Craft said, “my family and I don’t have to worry about food and buying groceries.”
“I can take a breath of fresh air my family can breathe. My kids can have a sigh of relief because they’re teenagers and they see what’s happening. I can’t hide them from it. They know the bills they can read.”
Washington’s tax system — no income tax, heavily reliant on sales tax — has long let the wealthy pay a smaller share of their income in state taxes than the poor and working class.
The Working Families Tax Credit represents a move to shift the burden, by giving some money back to the state’s lowest earners.
The tax credit was actually created in 2008, but was unfunded and didn’t pay out a cent until this year. In 2021, with state coffers flush with federal COVID aid, huge bipartisan majorities in the state Legislature voted to fund the program for the first time.
At the same time, state Democrats, with no Republican support, sought to further shift the tax code, by reaping more revenue from the state’s wealthiest population. They passed a new capital gains tax, which imposes a 7% tax on profits of more than $250,000 from the sales of assets such as stocks and bonds. Last month, the state Supreme Court ruled the tax constitutional, after a lengthy court battle.
