New Tax Credit Will Help Thousands of Low-Income Families in Washington State

by Agueda Pacheco Flores

Three years ago, when the pandemic first hit, Nijhia Jackson had to stop working, like so many others across the country. Thanks to the money Jackson got from the federal stimulus, she was able to pay her rent and the internet bill that her family relied on.

Now, a new state tax credit will give Jackson additional cash that she can use to pay for her family's needs. Like the stimulus money, Jackson says the credit will "majorly" help her and her family.

As of Wednesday, Feb. 1, nearly two years after Gov. Jay Inslee first signed an economic justice package into law, people can apply for the State's Working Families Tax Credit. On the first day the application launched, advocates of the tax credit gathered at The Seattle Public Library, including Gordon McHenry Jr., president and CEO of United Way of King County. For the past 20 years, the organization has offered a program that helps the public prepare their taxes for free.

"The journey to an equitable society takes time, it takes intentionality, and it takes good policy," McHenry said, adding that the cash from the new tax credit could add an influx of up to $54 million to the state's economy.

Eligible families and individuals only need to have lived in Washington State for at least 183 days, made at least $1 during that time, and be between the ages of 25 and 65 years old or have at least one child. Applicants do not need to pay back the credit amount, which can be up to $1,200. Thousands of families across the state are expected to benefit from the new tax credit, particularly families and People of Color, who advocates say are disproportionately affected by the state's regressive tax code because of how it burdens low-income earners.

Marcy Bowers is the executive director of the Statewide Poverty Action Network, and on Tuesday's launch day, she said she was having a great day.

"We've been working on this policy for 15 years," she said. "I came to this issue because what people need to get out of poverty is actual cash, they need to be able to pay for things that they need, to have stability [and] resources without having to tell their story of trauma to access those resources."

People can easily apply for the credit when they do their taxes through a free volunteer tax assistance site, through a Washington State Department of Revenue online or paper application, or through a third-party tax preparer. (TurboTax does not offer this credit currently.)

This new tax credit is similar to a tax credit that was passed in 2008, but due to the Great Recession that year, it was never funded.

Bowers says the tax credit was possible in large part because of COVID-19. Millions of people braved the pandemic thanks to economic impact checks approved by Congress.

"What really changed over the last few years was understanding what cash can do for people," she said, as she listed off what she's heard some people tell her they'll use the money for. "One person told me they would eat more fresh foods, and this gives boost to their SNAP benefits, or 'I'm signing my kids up for swim lessons I can afford now with this kind of boost.'"

For Jackson, the state's new tax credit will help her pay for her sons' sporting goods.

"My oldest son is wrestling for his middle school team, and my younger son plays football for the league out here," Jackson said. "It would help majorly with that."

Apply for the Working Families Tax Credit through a free volunteer tax assistance site, through a Washington State Department of Revenue application, or through a third-party tax preparer.

Featured Image: Gordon McHenry Jr., president and CEO of United Way of King County speaks at an event about the Working Family Tax Credit at The Seattle Public Library. (Photo: Leila Reynolds, Washington State Budget and Policy Center)