EARNED INCOME TAX CREDIT (EITC)

Rate (Fully-Refundable): 38% of the federal credit

Eligibility Requirements: All Vermont taxpayers who qualify for the federal credit are automatically eligible.

Latest Legislative Action: In June 2018, Vermont enacted a state budget for Fiscal Year 2019 that included an expansion of the state’s EITC from 32 to 36 percent of the federal credit.

Notes: During the 2013 legislative session, lawmakers considered a bill that would have increased the state’s EITC to 34% of the federal credit. However, the bill did not advance out of committee.

CHILD TAX CREDIT (CTC)

Rate (Fully-Refundable): $1,000 per qualifying child.

Latest Legislative Action: On May 27, 2022, Governor Phil Scott signed legislation to enact a state-level Child Tax Credit worth $1,000 per child under 5 years old as part of a larger tax cut package. During the revision process, there was discussion over a sunset provision. The condition was removed in the final version of the bill, making the tax credit a permanent benefit.

CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)

Vermont offers two versions of the state CDCTC with a more generous (and refundable) benefit for low income families.

Credit for Child and Dependent Care

Rate (Fully-Refundable): 72% of federal CDCTC²

Eligibility: All Vermont taxpayers who qualify for the federal credit are automatically eligible.

Low Income Child and Dependent Care Credit

Rate (Fully-Refundable): 50% of federal CDCTC³

Eligibility:

• Those filing as Single or Head of Household must have less than $29,999 in adjusted gross income.
• Those filing Married Jointly or Civil Union Jointly must have less than $39,999 in adjusted gross income.
• Parents must use an accredited provider on the List of Child Care Programs Qualifying for the Vermont Low Income Child and Dependent Care Tax Credit.

Note: Those that qualify for the low income CDCTC may not file for both versions of the credit.