The expanded pandemic-era federal child tax credit helped in reducing child poverty. This inspired many states to provide their own version of the child tax credit, and one such state to do so is Utah. Starting January 2024, eligible families in the state will get a child tax credit of $1000 for children ages 1 to 3.
Child tax credit from Utah: who will get it?
In March this year, Utah enacted its first child tax credit after Gov. Spencer Cox signed H.B.170. The nonrefundable child tax credit from Utah will assist taxpayers in lowering their tax liability to zero.
Eligible families will receive a credit of $1,000 per child for children ages 1 to 3. To qualify for the child tax credit, the annual income of single filers must be $43,000 or less, filers with “married filing separately” status must earn $27,000 or less, while filers with a “married filing jointly” status must earn $54,000 or less.
In addition to the child tax credit from Utah, families can also benefit from the Earned Income Tax Credit (EITC). Gov. Cox expanded the state’s EITC program in March 2023 as part of a larger tax cut bill. Gov. Cox signed H.B.54, expanding the nonrefundable state EITC from 15% to 20% of the federal rate.
The amount of EITC you get depends on your family’s earnings and the number of children you have. The federal EITC could help you to reduce your federal taxes. If your EITC amount is more than your federal taxes, you get the balance money back from the government.
However, Utah’s EITC is “non-refundable.” This means the credit can only be applied to the income taxes you owe, and you will not get any money back.
Many states have launched or expanded CTC
The expanded federal pandemic-era child tax credit helped to lift millions of children out of poverty in 2021. However, the expanded credit expired at the end of that year, resulting in the child poverty rate more than doubling in 2022.
Realizing the importance of the CTC, several states have launched or expanded their own child tax credit over the past couple of years. Specifically, six states have implemented a new child tax credit program (New Jersey, New Mexico and Vermont in 2022, and Minnesota, Oregon and Utah in 2023), while five states have expanded their existing program, according to the Institute on Taxation and Economic Policy.
Minnesota’s child tax credit program offers $1,750 per child under 18 to single filers with annual income less than $29,500 ($35,000 or below for couples filing jointly). There is no limit to the number of children who qualify for the credit.
Minnesota’s child tax credit is fully refundable, meaning the filer gets the money back if the credit amount is more than the taxes. The child tax credit amount and the income threshold are indexed to inflation.