Working families' tax credit

AN ACT Relating to expanding eligibility for the working 1
families' tax credit to everyone age 18 and older; amending RCW 2
82.08.0206; amending 2023 c 456 s 3 (uncodified); creating a new 3
section; and providing an effective date. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 82.08.0206 and 2024 c 3 s 1 are each amended to read 6
as follows: 7
(1) A working families' tax credit, funded by sales and use tax 8
imposed, is provided to eligible low-income persons for calendar 9
years beginning on or after January 1, 2022. The credit is refundable 10
and is calculated as provided in this section. 11
(2) For purposes of the credit in this section, the following 12
definitions apply: 13
(a)(i) "Eligible low-income person" means an individual who:14
(A) Is eligible for the credit provided in Title 26 U.S.C. Sec. 15
32 of the internal revenue code; 16
(B) Properly files a federal income tax return for the prior 17
federal tax year, and was a Washington resident during the year for 18
which the credit is claimed; and 19
(C) Has paid either retail sales tax under this chapter or use 20
tax under chapter 82.12 RCW, or both. There is a rebuttable 21
H-0438.1
HOUSE BILL 1214
State of Washington 69th Legislature 2025 Regular Session
By Representatives Thai, Reed, Shavers, Farivar, Simmons, Pollet,
Lekanoff, and Scott
Prefiled 01/09/25. Read first time 01/13/25. Referred to Committee
on Finance.
p. 1 HB 1214
presumption that a person paid either retail sales tax under this 1
chapter or use tax under chapter 82.12 RCW, or both, if they were a 2
Washington resident during the year for which the credit is claimed.3
(ii) "Eligible low-income person" also means an individual who 4
meets the requirements provided in (a)(i)(B) of this subsection and 5
would otherwise qualify for the credit provided in Title 26 U.S.C. 6
Sec. 32 of the internal revenue code except that one or any 7
combination of the following conditions apply: 8
(A) The individual filed a federal income tax return for the 9
prior federal tax year using a valid individual taxpayer 10
identification number in lieu of a social security number, and the 11
individual's spouse, if any, and all qualifying children, if any, 12
have a valid individual taxpayer identification number or a social 13
security number; ((or))14
(B) The individual filed their federal income tax return for the 15
prior federal tax year under the married filing separately status. 16
For purposes of the refund provided in this section, the special rule 17
for separated spouse under Title 26 U.S.C. Sec. 32 (d)(2)(B) of the 18
internal revenue code does not apply; or19
(C) The individual does not meet the age requirement, but is at 20
least age 18 by the end of the prior federal tax year.21
(b) "Income" means earned income as defined by Title 26 U.S.C. 22
Sec. 32 of the internal revenue code. 23
(c) "Individual" means an individual or an individual and that 24
individual's spouse if they file a federal joint income tax return.25
(d) "Internal revenue code" means the United States internal 26
revenue code of 1986, as amended, as of June 9, 2022, or such 27
subsequent date as the department may provide by rule consistent with 28
the purpose of this section. 29
(e) "Maximum qualifying income" means the maximum federally 30
adjusted gross income for the prior federal tax year.31
(f) "Qualifying child" means a qualifying child as defined by 32
Title 26 U.S.C. Sec. 32 of the internal revenue code, except the 33
child may have a valid individual taxpayer identification number in 34
lieu of a social security number. 35
(g) "Washington resident" means an individual who is physically 36
present and residing in this state for at least 183 days. "Washington 37
resident" also includes an individual who is not physically present 38
and residing in this state for at least 183 days but is the spouse of 39
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a Washington resident. For purposes of this subsection, "day" means a 1
calendar day or any portion of a calendar day. 2
(3)(a) Except as provided in (b) and (c) of this subsection, for 3
calendar year 2023 and thereafter, the working families' tax credit 4
refund amount for the prior calendar year is: 5
(i) $300 for eligible persons with no qualifying children;6
(ii) $600 for eligible persons with one qualifying child;7
(iii) $900 for eligible persons with two qualifying children; or8
(iv) $1,200 for eligible persons with three or more qualifying 9
children. 10
(b) Except as provided in (f) of this subsection, the refund 11
amounts provided in (a) of this subsection will be reduced, rounded 12
to the nearest dollar, as follows: 13
(i) For eligible persons with no qualifying children, beginning 14
at $2,500 of income below the federal phase-out income for the prior 15
federal tax year, by 18 percent per additional dollar of income until 16
the minimum credit amount as specified in (c) of this subsection is 17
reached. 18
(ii) For eligible persons with one qualifying child, beginning at 19
$5,000 of income below the federal phase-out income for the prior 20
federal tax year, by 12 percent per additional dollar of income until 21
the minimum credit amount as specified in (c) of this subsection is 22
reached. 23
(iii) For eligible persons with two qualifying children, 24
beginning at $5,000 of income below the federal phase-out income for 25
the prior federal tax year, by 15 percent per additional dollar of 26
income until the minimum credit amount as specified in (c) of this 27
subsection is reached. 28
(iv) For eligible persons with three or more qualifying children, 29
beginning at $5,000 of income below the federal phase-out income for 30
the prior federal tax year, by 18 percent per additional dollar of 31
income until the minimum credit amount as specified in (c) of this 32
subsection is reached. 33
(c) If the refund for an eligible person as calculated in this 34
section is greater than zero cents, but less than $50, the refund 35
amount is $50. 36
(d) The refund amounts in this section shall be adjusted for 37
inflation every year beginning January 1, 2024, based upon changes in 38
the consumer price index that are published by November 15th of the 39
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previous year for the most recent 12-month period. The adjusted 1
refund amounts must be rounded to the nearest $5. 2
(e) For purposes of this section, "consumer price index" means, 3
for any 12-month period, the average consumer price index for that 4
12-month period for the Seattle, Washington area for urban wage 5
earners and clerical workers, all items, compiled by the bureau of 6
labor statistics, United States department of labor.7
(f) The percentage rate of remittance reductions in (b) of this 8
subsection must be adjusted every year beginning January 1, 2023, 9
based on calculations by the department that result in the minimum 10
credit being received at the maximum qualifying income level.11
(4) The working families' tax credit shall be administered as 12
provided in this subsection. 13
(a) The refund paid under this section will be paid to eligible 14
filers who apply pursuant to this subsection. 15
(i) Application must be made to the department in a form and 16
manner determined by the department. If the application process is 17
initially done electronically, the department must provide a paper 18
application upon request. The application must include any 19
information and documentation as required by the department. The 20
department may use the information provided by the individual to 21
calculate the refund amount. Income reported on the application may 22
be rounded to the nearest dollar. 23
(ii) An individual applying for the credit under this section 24
must keep records necessary for the department to verify eligibility 25
under this section. Any information provided by the individual is 26
subject to audit verification by the department. 27
(iii) In addition to information provided on the application, the 28
department may verify that an individual qualifies as a Washington 29
resident through the use of automated verification tools or other 30
reasonable means. 31
(iv)(A) Except as provided in (a)(iv)(B) of this subsection (4), 32
application for a refund under this section must be made in the year 33
following the year for which the federal tax return was filed, but in 34
no case may any refund be provided for any period before January 1, 35
2022. 36
(B)(I) A person may apply for any refund for which they were 37
eligible but did not claim under (a)(iv)(A) of this subsection (4) 38
for up to three additional years. A person must complete an 39
application to claim this refund within the three calendar years 40
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after the end of the calendar year in which the federal income tax 1
return for that tax year was legally due for federal income tax 2
purposes, without regard to any federal extension. 3
(II) If a person seeks to increase the amount of a refund that 4
has been made under this subsection (4), the person must apply for 5
the amended refund within the nonclaims period established under RCW 6
82.32.060(1). 7
(v) A person may not claim a credit on behalf of a deceased 8
individual. No individual may claim a credit under this section for 9
any year in a disallowance period under Title 26 U.S.C. Sec. 32 (k)(1) 10
of the internal revenue code or for any year for which the individual 11
is ineligible to claim the credit in Title 26 U.S.C. Sec. 32 of the 12
internal revenue code by reason of Title 26 U.S.C. Sec. 32 (k)(2) of 13
the internal revenue code. 14
(b) The department shall protect the privacy and confidentiality 15
of personal data of refund recipients in accordance with chapter 16
82.32 RCW. 17
(c) The department shall, in conjunction with other agencies or 18
organizations, design and implement a public information campaign to 19
inform potentially eligible persons of the existence of, and 20
requirements for, the credit provided in this section.21
(d) The department must work with the internal revenue service of 22
the United States to administer the credit on an automatic basis as 23
soon as practicable. 24
(5) Receipt of a refund under this section may not be used in 25
eligibility determinations for any state income support programs or 26
in making public charge determinations. 27
(6) The department may adopt rules necessary to implement this 28
section. This includes establishing a date by which applications will 29
be accepted, with the aim of accepting applications as soon as 30
possible. 31
(7) The department must review the application and determine 32
eligibility for the working families' tax credit based on information 33
provided by the applicant and through audit and other administrative 34
records, including, when it deems it necessary, verification through 35
information from the internal revenue service of the United States, 36
other federal agencies, Washington state agencies, third-party 37
entities, or other persons. The department may accept a signed 38
attestation in a form and manner determined by the department from an 39
individual to presumptively validate that an individual meets all the 40
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eligibility requirements as provided in this section. The signed 1
attestation is subject to audit verification by the department to 2
validate an individual's eligibility for the working families' tax 3
credit. 4
(8) If, upon review of internal revenue service data or other 5
information obtained by the department, it appears that an individual 6
received a refund that the individual was not entitled to, or 7
received a larger refund than the individual was entitled to, the 8
department may assess against the individual the overpaid amount. The 9
department may also assess such overpaid amount against the 10
individual's spouse if the refund in question was based on both 11
spouses filing a joint federal income tax return for the year for 12
which the refund was claimed. 13
(a) Interest as provided under RCW 82.32.050 applies to 14
assessments authorized under this subsection (8) starting six months 15
after the date the department issued the assessment until the amount 16
due under this subsection (8) is paid in full to the department. 17
Except as otherwise provided in this subsection, penalties may not be 18
assessed on amounts due under this subsection. 19
(b) If an amount due under this subsection is not paid in full by 20
the date due, or the department issues a warrant for the collection 21
of amounts due under this subsection, the department may assess the 22
applicable penalties under RCW 82.32.090. Penalties under this 23
subsection (8)(b) may not be made due until six months after the 24
department's issuance of the assessment. 25
(c) If the department finds by clear, cogent, and convincing 26
evidence that an individual knowingly submitted, caused to be 27
submitted, or consented to the submission of, a fraudulent claim for 28
refund under this section, the department must assess a penalty of 50 29
percent of the overpaid amount. This penalty is in addition to any 30
other applicable penalties assessed in accordance with (b) of this 31
subsection (8). 32
(9) If, within the period allowed for refunds under RCW 33
82.32.060, the department finds that an individual received a lesser 34
refund than the individual was entitled to, the department must remit 35
the additional amount due under this section to the individual.36
(10) Interest does not apply to refunds provided under this 37
section. 38
(11) Chapter 82.32 RCW applies to the administration of this 39
section. 40
p. 6 HB 1214
Sec. 2. 2023 c 456 s 3 (uncodified) is amended to read as 1
follows: 2
(1) This section is the tax preference performance statement for 3
the tax preference contained in section 2, chapter 195, Laws of 2021 4
((and)), section 1, chapter 456, Laws of 2023 , and section 1, 5
chapter . . ., Laws of 2025 (section 1 of this act) . This performance 6
statement is only intended to be used for subsequent evaluation of 7
the tax preference. It is not intended to create a private right of 8
action by any party or be used to determine eligibility for the 9
preferential tax treatment. 10
(2) The legislature categorizes this tax preference as one 11
intended to provide tax relief for certain individuals as indicated 12
in RCW 82.32.808(2)(e). 13
(3) It is the legislature's specific public policy objective to 14
allow low-income and middle-income workers to recover some or all of 15
the sales tax they pay to support state and local government as a way 16
to increase their economic security and to decrease the regressivity 17
of our state tax code. It is the legislature's intent to provide a 18
sales and use tax credit, in the form of a remittance, to low-income 19
and middle-income working families. 20
(4) The joint legislative audit and review committee shall review 21
this preference in 2028 and every 10 years thereafter. If a review 22
finds that the working families' tax credit does not provide 23
meaningful financial relief to low-income and middle-income 24
households, RCW 82.08.0206 expires at the end of the calendar year 25
two years after the adoption of the final report containing that 26
finding. The joint legislative audit and review committee shall 27
provide written notice of the expiration date of RCW 82.08.0206 to 28
the department of revenue, the chief clerk of the house of 29
representatives, the secretary of the senate, the office of the code 30
reviser, and others as deemed appropriate by the joint legislative 31
audit and review committee. In its review of the program, the joint 32
legislative audit and review committee should use at least the 33
following metrics: Size of the benefit per household, number of 34
household beneficiaries statewide, and demographic information of 35
beneficiaries to include family size, income level, race and 36
ethnicity, and geographic location. (5) In order to obtain the data 37
necessary to perform the review in subsection (4) of this section, 38
the joint legislative audit and review committee may refer to the 39
remittance data prepared by the department of revenue.40
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NEW SECTION. Sec. 3. RCW 82.32.805 does not apply to this act.1
NEW SECTION. Sec. 4. This act takes effect January 1, 2026.2
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