After Vermont Governor Phil Scott signed a package of tax cuts last Friday, Vermont households earning $125,000 or less will be eligible to receive $1,000 for each child up to age 5.
In addition, the Democratic-controlled legislature and the Republican governor agreed to a tax cut.
In support of children
Initially, the House of Representatives planned to spend nearly $50 million, much of it dedicated to the child tax credit.
The Senate responded with an envelope of $36 million, of which only $22.5 million is for the child tax credit.
In addition, faced with the possibility of an economic downturn, the Upper House proposed to eliminate the main tax breaks from the package after three years.
As part of this approach, the final version of H.510 will spend $40 million, of which $32 million will go to the Child Tax Credit, which is expected to benefit more than 30,000 children.
One point to note is that families claiming the child tax credit will lose $20 for every $1,000 above the income threshold.
The bill also includes tax relief for low-income workers, caregivers, student loan payers, retirees and people receiving military pensions.
As is, Vermont’s new child tax credit builds on a federal credit that was temporarily extended during the pandemic to send an additional $3,600 to most parents for each child who is 6 years old as the age cut-off.
While payments have been widely credited with lifting millions of children out of poverty, that was only in the days of cash transfers.