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H 90

An act relating to the Vermont earned income tax credit and the Vermont child tax credit

2025-2026 Regular Session Introduced by Bill Canfield and 1 co-sponsor

H.90 raises Vermont EITC as a percent of federal EITC (varying by children), shields the Vermont child tax credit from tax debt setoff, retroactive to 2025.

Read first time and referred to the Committee on Ways and Means
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WeVote Research Nonpartisan
Bill Summary · H 90

Summary of H.90 (Session 2025-2026; Vermont)

Purpose and intent

  • Proposes amendments to Vermont’s personal income tax credits to align and enhance the Vermont earned income tax credit (EITC) and the Vermont child tax credit.
  • Specifically, increases or refines the calculation of the Vermont EITC and Vermont child tax credit, and excludes these credits from tax debt setoff (i.e., they would not be interceptable to satisfy state tax debts or debts owed to other states).

Key provisions and changes

1) Vermont Earned Income Tax Credit (VT EITC) – 32 V.S.A. § 5828b (amended)
- Eligibility: A resident or part-year resident who would be entitled to the federal EITC (or would be entitled but for lack of a qualifying ITIN for the individual, spouse, or children).
- Calculation:
- The Vermont credit is set at 38% of the federal EITC that the filer would receive, adjusted by the proportion of earned income relative to total income while the filer resides in Vermont.
- The 38% is scaled based on residency duration and federal EITC eligibility.
- Rate structure (section highlights):
- If the taxpayer claims one or more qualifying children for EITC under VT EITC, the credit is 55% of the federal EITC amount.
- If the taxpayer claims no qualifying children for EITC under VT EITC, the credit is 100% of the federal EITC amount.
- Note: The text defines the method to determine the Vermont credit as a percentage of the federal EITC and ties it to the proportion of income earned while residing in Vermont.

2) Vermont Child Tax Credit – 32 V.S.A. § 5830f (amended)
- The bill adds or reinforces a provision that the Vermont child tax credit shall not be subject to tax debt setoff.
- This means the credit cannot be seized or intercepted to satisfy tax obligations or other debts through state debt-setoff mechanisms.

3) Tax debt setoff protection (both credits)
- Sections 5828b (a portion) and 5830f (e) explicitly state that the Vermont EITC and the Vermont child tax credit are not subject to tax debt setoff under state law or any other state’s laws.

4) Effective date
- The act is retroactive to January 1, 2025.
- It applies to taxable years beginning on or after January 1, 2025, notwithstanding general rule of retroactive laws.

Who would be affected

  • Vermont residents and part-year residents who qualify for the federal EITC (or would qualify but for ITIN-related limitations) would be eligible for a Vermont EITC, calculated as a percentage of the federal EITC.
  • Families with dependent children who qualify for the federal EITC would see Vermont-specific credit amounts scaled by the number of qualifying children (55% for one or more children; 100% for no qualifying children) relative to federal EITC, adjusted by Vermont residency period.
  • Claimants of these credits would experience protection from tax debt setoff, preventing the credits from being intercepted to satisfy tax debts.

Procedural and timeline notes

  • Introduced and referred to the House Ways and Means Committee (January 24, 2025).
  • Retroactive effective date: January 1, 2025, applying to tax years beginning on or after that date.

Summary takeaway

H.90 seeks to (a) adjust the Vermont EITC to be a percentage of the federal EITC with specific multipliers based on the number of qualifying children, (b) ensure the Vermont child tax credit is insulated from tax debt setoff, and (c) apply retroactively to tax years starting in 2025. The combined effect is to increase predictability and anti-poverty impact of Vermont’s targeted tax credits while shielding them from debt intercepts.

Compiled from official sources — confirm details with the bill’s official record.

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