The Working Families Tax Credit (WFTC) is officially in its second year of implementation! Looking back on the program’s first year, it is clear that the WFTC is an impactful tool helping families living on low incomes make ends meet. Washington state is the first state without an income tax to implement a state tax credit like the WFTC. This refund helps support families and starts to fix our inequitable tax code.
A broad coalition of over 50 labor, immigrant rights, and direct service organizations advocated for this state tax credit for over 10 years, starting in 2008. It was finally passed and funded in 2021, and went into implementation in 2023. Eligible households receive a minimum credit of $50 and a maximum credit of $1,255 – according to their household income and the number of eligible children in the household. Income eligibility thresholds and credit amounts increase yearly.
In 2023, an estimated 367,815 participants were eligible for the credit across Washington. In the program’s first year, about 162,000 applications were refunded, or about 44% of all eligible households. People who file their taxes with an Individual Taxpayer Identification Number (ITIN) made up 11% of refunded applicants. ITINs are a tax identification number used by some taxpayers, including by undocumented immigrants, some survivors of domestic violence, and certain other visa holders.
The Department of Revenue collects information on the race and ethnicity of applicants on a voluntary basis, and in 2023, only 36% of applicants disclosed demographic information. A lack of meaningful data means it is difficult to analyze whether the program is adequately reaching BIPOC and immigrant communities.
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Last year, lawmakers extended the time people have to claim their credit to three years, so Washingtonians who missed out can still claim the WFTC for last year as well. In this year’s supplemental budget, legislators included an additional $1 million in funding for community-based organizations to advance outreach efforts to boost participation in the WFTC program. Simplifying and streamlining the application process for eligible households who already receive other benefits, like Temporary Assistance for Needy Families, would go a long way towards improving the reach of this impactful program.
Hover over graphic to see enrollment rates by county
Refunds for households with children
Refunds from the WFTC program reached over 250,000 children across Washington, or just under 1 in 6 of the state’s youth. According to the UW’s Self Sufficiency Standard, in Washington, nearly half of households struggling to make ends meet are households with children.
Due to the credit’s structure, a household’s WFTC refund increases as the number of children in the household increases. On average, applicants with qualifying children received a refund that was 3.5 times larger than the refund to workers without qualifying children. The average WFTC refund increases by $293 per qualifying child.
Maximum WFTC refund according to income and household size
Number of Qualifying Children
Maximum Annual Income (filing single)
Maximum Annual Income (married, filing jointly)
Maximum Credit Amount
0
$17,640
$24,210
$315
1
$46,560
$53,120
$625
2
$52,918
$59,478
$940
3+
$56,838
$63,398
$1,255
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Households without qualifying children are a diverse group that includes young people just entering the workforce, older adults who are caring for their parents or family members, and working people of all life stages. This group is the only demographic taxed further into poverty by our federal tax code.
Combined impact of federal and state refunds for Washington households
The WFTC is one of several tax credits many Washington households can receive each year. Families qualifying for the WFTC may also qualify for two federal tax credits: the Earned Income Tax Credit (EITC) and Child Tax Credit. Households qualifying for all three credits could receive a maximum refund of $12,540, but not all households claim all credits for which they are eligible. If every eligible household claimed their WFTC and EITC credits, the state economy would see an additional boost of over $105 million from the WFTC and $210 million from the EITC – for a total investment of over $1.2 billion, directly into the pockets of families.
Expanding credit eligibility to support more households with low incomes
Currently the WFTC offers support to households with qualifying children living on low incomes, and childless workers between the ages of 25 and 65 that meet all eligibility requirements. As a result, young adults (ages 18 to 24) and workers over the age of 65 who do not have a qualifying child are excluded from the WFTC program. This arbitrary age exclusion was carried over from the federal EITC program design.
In 2024, advocates encouraged the legislature to remove this age exclusion so that all working adults over the age of 18 can access a WFTC refund. This expansion would add 114,000 eligible households and would expand the WFTC by 30%, by making sure working grandparents and young adults with low incomes can benefit. Unfortunately, lawmakers did not pursue this proposal in the 2024 legislative session.
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What’s next for the WFTC?
In its first year, the Working Families Tax Credit proved to be an indispensable tool. For families struggling to make ends meet, the refund ensured that people could put food on the table and cover emergency expenses. However, over half of households eligible for the program did not apply for their refund, and due to an arbitrary age restriction, childless workers ages 18 to 24 and over the age of 65 could not benefit from the program. In the 2025 legislative session, lawmakers should expand the WFTC so that all working adults living on low incomes can benefit from the cash boost offered by the program.
Molly (she/her) is a member of the Budget and Policy Center’s policy team, where she holds a State Policy Fellowship through the Center on Budget and Policy Priorities’ two-year national fellowship program. She currently leads the team’s work on criminal legal reform policies.
