Earned Income And Child Tax Credits

For the income tax year commencing on January 1, 2024, the act increases the earned income tax credit that a resident individual can claim on their state income tax return from 25% to 38% of the federal credit claimed on the resident individual's federal income tax return.

The amount a taxpayer can claim as an income tax credit for the state child tax credit has been calculated based on a percentage, which varies depending on the taxpayer's income level, of what the taxpayer claimed for a federal child tax credit. For income tax years commencing on and after January 1, 2024, the act restructures the state child tax credit so that the amount of the credit that a taxpayer can claim is a flat rate instead of a percentage of what the taxpayer claimed for the federal child tax credit as follows:

• A taxpayer filing a single return with adjusted gross income of $25,000 or less and taxpayers filing a joint return with adjusted gross income of $35,000 or less can claim $1,200;
• A taxpayer filing a single return with adjusted gross income greater than $25,000 but less than or equal to $50,000 and taxpayers filing a joint return with adjusted gross income greater than $35,000 but less than or equal to $60,000 can claim $600; and
• A taxpayer filing a single return with adjusted gross income greater than $50,000 but less than or equal to $75,000 and taxpayers filing a joint return with adjusted gross income greater than $60,000 but less than or equal to $85,000 can claim $200.

The act also provides that for income tax years commencing on and after January 1, 2025, the department of revenue must adjust the adjusted gross income amounts to reflect inflation if cumulative inflation since the last adjustment, when applied to the current limits, results in an increase of at least $1,000 when the adjusted limits are rounded to the nearest $1,000.

APPROVED by Governor June 7, 2023

EFFECTIVE August 7, 2023

NOTE: This act was passed without a safety clause and takes effect 90 days after sine die.
(Note: This summary applies to this bill as enacted.)