Meetings
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[Ann Cummings (Chair)]: Morning. I know that you all have a lot going on today, and so don't wanna put any pressure on you to even discuss anything. Thought we could just get started this morning by having Kirby take us through and Pat take us through sort of the, you know, the two different versions. But and then we can find another time later this week to actually discuss things. That sound good? It sounds good. Okay. Great. Maybe it'll be a little refreshing.
[Pat Francis (Joint Fiscal Office)]: I like once a year later. Anyways. So
[Chris (Legislative Counsel)]: would you like to start with the senate or house version for the section by section of the house version that I prepared?
[Ann Cummings (Chair)]: Let's start with the senate version since that was the first one. We can, like, go through time together. How does that sound? Okay.
[Chris (Legislative Counsel)]: So on the screen for anyone who needs to match him. Okay. So s 51 s passed by the senate was an act relating to the Vermont unpaid caregiver tax credit. The only tax credit or concept that was in s 51 out of the senate was the unpaid caregiver tax credit. The house version, as you'll see, has a few different credit changes. So in s 51 specified by the senate, there are work findings establishing the need need for an unpaid caregiver tax credit and the the costs and burdens put on to people who are providing uncompensated care and then there's a statutory purpose. I could let me know if you want me to get a think this is the purpose.
[Pat Francis (Joint Fiscal Office)]: Yeah. Yeah. And
[Chris (Legislative Counsel)]: then we have the statutory purpose, which is required for all credits and tax features, which so the the purpose here is to provide the private support to Vermonters who spend significant time providing uncompensated care for a family member. Then we get into the credit itself. It's a I'm just checking to make trying checking to make sure it's refundable credit. It is. So it's a refundable credit available for resident individuals or part time, part part year resident individuals with a maximum allowable credit of a thousand dollars for providing twelve months of uncompensated care. The credit is prorated out or rated out on a monthly basis based on whether or on the number of months that the individual spent giving care for at least twenty hours per week of uncompensated care to an individual. There were a lot of requirements that the individual receiving care had to meet, including being related to claimant, by blood, simple marriage, or adoptions, needing assistance with daily activities of daily living, home health care, assistance from any safe at home, having a medical diagnosis or a medically diagnosed disability or health condition, and not residing in any version of the nursing. And so this is subsection b here. Page three is the proration, and there's a phase out for individuals with AGI exceeding one hundred and twenty five thousand dollars And then C and D have to do with compliance, potential compliance issues. C says that the individual claiming the credit shall attest that they met all the requirements for the number of months claimed. And under sub d, it provides some authority for the Department of Taxes to look into compliance, including requiring a form to be executed by a medical professional.
[Pat Francis (Joint Fiscal Office)]: Oh, you have that? Thank you.
[Chris (Legislative Counsel)]: So that's it. That's.
[Ann Cummings (Chair)]: The house?
[Chris (Legislative Counsel)]: The house? House proposal amendment. Remove the credit that we were just discussing, and I'm gonna scroll down to look at the screen. Renamed the potential acts to an act relating to Vermont Income Tax Exclusions and tax credits. It started off with a tax credit and the house so I'll make it not blue here.
[Pat Francis (Joint Fiscal Office)]: I think Okay. Well,
[Ann Cummings (Chair)]: you don't know that is today, except today, that would be fine. Oh. Yeah. Yeah. Removing the blues.
[Chris (Legislative Counsel)]: Yeah. Smurfed it. Anyway, so the so the the tax credit changes that are now in s 51, after the health proposal amendment, is number one, there's a change to Vermont tax credit, which came from the administration. It was part of h one thirty five, started as the miscellaneous tax bill, and it's to increase for the child tax credit the age of the qualifying child from five to six years. The other changes in here are just technical, not substantive. Section two substantive change is to start allowing an EITC or individuals who do not have qualifying children to receive 100% of the federal credit. The background here is that the credit's much less for people who do not have qualifying children, so allowing 100% of the federal credit, is still less than providing 38% of the credit to individuals who do have qualifying children. And, obviously, Pat is the person who could help you best with details on that. Again, the rest of it is technical. Section three, there are changes to the partial exclusions for retirement income. All of the thresholds for existing exclusions, which is for Social Security benefits, civil service retirement system, and other types of retirement systems that are similar to civil civil service where people did not pay their Social Security for all those things. Vermont allows Social Security of potentially a full exclusion of that income for the other systems, $10,000 excluded from their income. And so the qualifying thresholds for the amount of AGI a person can have to receive these exclusions is being increased by $5,000 just across all of them. Those are the number changes you see. Under current law, there is also a partial exclusion available for military retirement. What this does is change that so that, first, US military survival benefit income is also included in this exclusion, And then the exclusion itself is significantly increased from current law. So a taxpayer with less than or equal to a 125,000 of AGI could all military retirement and survivor benefit income and then that becomes phased out between AGIs of $125,000 or 75,000 And unlike the other exclusion, under current law, a taxpayer has to choose one to claim. For this expanded exclusion, the taxpayer can take this and one of the other ones. So it's not mutually exclusive to others. And that's the change in the military retirement. And last of all, we have, a Vermont veteran credit. It's available to individuals who serve in uniformed services and have a service record. It's a credit of up to $250, refundable credit of up to $250 a tax payers and an ATI up to 25. That's what we said we qualify, and then there's a phase out between 25,000 of ATI, 30,000 of ATI. And then all of this would be effective for tax filings next year.
[Ann Cummings (Chair)]: You don't have any questions for Chris? Thanks. Appreciate it. Pat, can you take us through the? Sure. Mister Francis? I
[Pat Francis (Joint Fiscal Office)]: can just talk through it. Back to exterminate for record. Yes. After 13 joint official office. So I guess just, like, quick step back, big picture. The budget accommodates up to 13 and a half million dollars worth of tax credits or just revenue reductions. The senate version of the bill is estimated to be $6,000,000 in foreground revenue. The house bill is fully within the 13 and
[Ann Cummings (Chair)]: a half million dollars,
[Pat Francis (Joint Fiscal Office)]: that the budget accommodates. So I can go through each individual, change it from the so there's only one change in the senate version. That's the 6,000,000 for the caregiver credit. In the house version, the change to the child tax credit would be 4,500,000.0. The EITC change would be 3,000,000. The changes to the Social Security and CSRS income would be 2,100,000.0. And then the military retirement would be 2.5. Veterans is 1.4. Total together, 13,500,000.0.
[Ann Cummings (Chair)]: And do folks need more explanation of the EITC thing? It's a little weird. Okay.
[Pat Francis (Joint Fiscal Office)]: Yeah. So, basically, the genesis or the thought process behind moving the claimants without children up to a 100%, but leaving those with children at the existing 38% is that the maximum credit amounts and the income, threshold requirements are much lower for people who are claiming the EITC without children. Even by moving from 38 to a 100% for, those without kids and leaving those with kids at 38, the maximum credit those people could receive is still less than half of someone who's playing just one child. So it's a big percent change going from 38 to a 100%, but the dollar figure only comes out to 3,000,000 and what is otherwise the biggest tax expenditure and personal income tax world. Existing last year, I think the the EITC was about $26,000,000. So, and of that, people without children make up about 5% of the total, credit claimed, but they make up about a third of claimants. So just to kinda highlight the it's a really big percent change. The dollar figure is relatively speaking much smaller because those, max credits and income eligibility thresholds are much more strict, And they're set at the federal level, so, that's why we just take a sort of percent of what it is.
[Ann Cummings (Chair)]: And the bottom of page two of the school election was the other time. Just trying to ask if you have any. Okay. Yeah. Go for it.
[Thomas Chittenden (Vice Chair)]: One question on the policy. Thank you for that background. I would guess that the current federal, doesn't have as much for what those people that don't have kids because and it goes up when they do have kids because kids are really expensive in both time and resources. So I'm just kinda curious. I don't remember what the governor's argument or where we came down with this policy objective to give more of a benefit to those without children.
[Ann Cummings (Chair)]: I think the thinking is that it's still a quite small credit even when you maximize at a 100%. And moving out there's certainly been proposals about moving outside of the federal definitions over the years, and I have really good arguments for them, but it causes an enormous amount of administrative challenges for the tax department when we have our own definition. Okay. So the maximum amount from $6.40 does.
[Pat Francis (Joint Fiscal Office)]: Okay. Yeah.
[Unknown (Department of Taxes staff)]: But and the people that qualify for that married filing jointly is about $26,000 in our income, So it's fairly low.
[Pat Francis (Joint Fiscal Office)]: Okay. Yeah.
[Unknown (Department of Taxes staff)]: Three. And that that program had been temporarily expanded to federal government level in 2021, 2022. Yep. So we had significantly more climates in those years, and then it dropped back down to where we are now.
[Ann Cummings (Chair)]: That is a pretty concrete presentation we should look at today or another time, but let me go and get started. More report? Is there a?
[Pat Francis (Joint Fiscal Office)]: There's a report from two years ago. Okay.
[Ann Cummings (Chair)]: Okay. Anyone else need anything? Okay. Thanks. And you've removed our credit? Indeed. Because? Both there was sort of a commitment to these other credits and the administrative challenges of the credit that you put forward seems like a lot of surmountable tax department. I think there's also a question about how it might be dependent care.
[Unknown (Department of Taxes staff)]: That's where I could use more perspective on the dependent care credit now that life life. Go up to the next meeting for the
[Pat Francis (Joint Fiscal Office)]: future. Thanks. We
[Ann Cummings (Chair)]: can get committee testimony. Okay. Thank you. I see. Thank you. Source should be the public virus. Okay. And then maybe on the other side of some other stuff, we can cover next week. Yes.