Child Tax Credit in Vermont, Raising children comes with significant financial responsibilities. To support families, Vermont offers a state-level Child Tax Credit (CTC) that provides financial relief to eligible households. Understanding the specifics of this credit can help Vermont families maximize their tax benefits and ease the cost of child-rearing.

What is the Child Tax Credit?

The Child Tax Credit is a tax benefit designed to assist families with qualifying children by reducing their tax liability. In Vermont, the state offers its own version of the CTC, providing a refundable credit of up to $1,000 per qualifying child. This means that even if a family’s tax liability is less than the credit amount, they can receive the difference as a refund.

Vermont’s Role in the Child Tax Credit

Vermont has implemented a state-level Child Tax Credit to supplement the federal CTC. This initiative aims to provide additional financial support to families with young children, recognizing the high costs associated with early childhood care and development. The state’s CTC is fully refundable and is available to both full-year and part-year residents, with the amount prorated based on the duration of residency within the tax year. Vermont Department of Taxes

Eligibility: Who Qualifies for the Child Tax Credit in Vermont?

To qualify for Vermont’s Child Tax Credit in 2025, families must meet the following criteria:

• Residency: Must be a full-year or part-year resident of Vermont.Vermont Department of Taxes+1Farm Credit East+1
• Qualifying Child: The child must be five years old or younger at the end of the tax year.Vermont Department of Taxes
• Adjusted Gross Income (AGI): The credit begins to phase out for households with an AGI exceeding $125,000, reducing by $20 for every $1,000 (or fraction thereof) over this threshold. The credit phases out completely at an AGI of $175,000. Vermont Department of Taxes
• Identification: Unlike the federal CTC, Vermont’s credit does not require the child to have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Vermont Department of Taxes

Income Limits for Child Tax Credit 2025

For the 2025 tax year, the Vermont Child Tax Credit phases out based on the taxpayer’s AGI:Vermont Department of Taxes

• Phase-Out Threshold: Begins at $125,000 AGI.
• Phase-Out Rate: The credit is reduced by $20 for every $1,000 (or fraction thereof) over the threshold.
• Complete Phase-Out: The credit is fully phased out at an AGI of $175,000.

How Much is the Child Tax Credit in 2025?

Eligible Vermont families can receive a refundable credit of up to $1,000 per qualifying child under the age of six. This credit is designed to provide financial assistance to families during the early, and often most expensive, years of child-rearing.

Real-Life Example: The Smith Family in Burlington, VT

The Smith family resides in Burlington, Vermont, and has two children aged three and five. Their AGI for 2025 is $120,000.New Haven Register+18Farm Credit East+18Vermont Department of Taxes+18

• Eligibility: Both children are under six, and the family’s AGI is below the phase-out threshold.
• Credit Amount: They qualify for the full $1,000 per child, totaling $2,000.
• Tax Liability: If their state tax liability is less than $2,000, they will receive the difference as a refund, thanks to the credit’s refundable nature.

How to Claim the Child Tax Credit in Vermont

To claim the Vermont Child Tax Credit:

1. File a Vermont Income Tax Return: Use Form IN-111.Town of Brattleboro, Vermont+13Tax Credits for Workers and Families+13BillTrack50+13
2. Complete the Necessary Schedules: Provide information about qualifying children and calculate the credit amount.
3. Submit by the Deadline: Ensure your tax return is filed by the state’s deadline to avoid penalties or delays.

For part-year residents, the credit amount will be prorated based on the portion of the year they resided in Vermont. Vermont Department of Taxes+1Vermont Department of Taxes+1

What About Families with No Income?

Vermont’s Child Tax Credit is fully refundable, meaning families with little or no tax liability can still benefit. Even if a family’s income is low enough that they owe no state income tax, they can receive the full credit amount as a refund, provided they meet the eligibility criteria. Vermont Department of Taxes

Other Child-Related Tax Benefits for Vermonters

In addition to the Child Tax Credit, Vermont offers several other tax benefits for families:

• Child and Dependent Care Credit: This credit is worth 72% of the federal Child and Dependent Care Tax Credit and is fully refundable. Vermont Department of Taxes+1TaxAct Blog+1
• Earned Income Tax Credit (EITC): Vermont’s EITC is 38% of the federal EITC amount, providing additional support to low- to moderate-income working families. TaxAct Blog
• Renter Credit: Available to residents who rented for the full year, with credit amounts varying from $1,000 to $2,500 based on income and family size. Vermont Department of Taxes

Tips for Maximizing Your Credit (2025)

1. Maintain Accurate Records: Keep documentation of your income, residency status, and information about your qualifying children.
2. File Early: Submitting your tax return early can expedite any potential refunds.
3. Seek Assistance: If you’re unsure about your eligibility or how to claim the credit, consult a tax professional or utilize free tax preparation services available in Vermont.
4. Stay Informed: Tax laws can change; regularly check the Vermont Department of Taxes website for the latest information.Vermont Department of Taxes

Conclusion

The Vermont Child Tax Credit provides valuable financial support to families with young children, helping to alleviate the costs associated with early childhood. By understanding the eligibility requirements and how to claim the credit, Vermont families can take full advantage of this benefit. Staying informed and proactive in tax planning ensures that families receive the full benefits available to them.Vermont Department of Taxes

20 Comprehensive FAQs on Vermont’s Child Tax Credit (2025): What Every Parent Must Know

The Vermont Child Tax Credit (CTC) is a significant financial support mechanism for families with young children. Understanding its nuances can help eligible families maximize their benefits. Below are detailed answers to 20 frequently asked questions about the Vermont CTC for the 2025 tax year.

1. What is the Vermont Child Tax Credit (CTC)?

The Vermont CTC is a state-level, fully refundable tax credit designed to assist families with young children. For the 2025 tax year, it offers up to $1,000 per qualifying child under the age of six. This credit aims to alleviate the financial burden of child-rearing and reduce child poverty in the state.

2. Who qualifies for the Vermont CTC in 2025?

To be eligible:

• Residency: Must be a full-year or part-year resident of Vermont.
• Qualifying Child: The child must be six years old or younger at the end of the tax year.
• Adjusted Gross Income (AGI): The credit begins to phase out for households with an AGI exceeding $125,000 and phases out completely at $175,000.
• Identification: Unlike the federal CTC, Vermont’s credit does not require the child to have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

3. How much is the Vermont CTC worth per child?

Eligible families can receive a refundable credit of up to $1,000 per qualifying child under the age of six. This means that even if a family’s tax liability is less than the credit amount, they can receive the difference as a refund.

4. Is the Vermont CTC refundable?

Yes, the Vermont CTC is fully refundable. This ensures that families with little or no tax liability can still benefit from the credit, receiving the full amount as a refund if applicable.

5. What are the income limits for the Vermont CTC?

The credit begins to phase out at an AGI of $125,000. For every $1,000 (or fraction thereof) over this threshold, the credit is reduced by $20. The credit phases out completely at an AGI of $175,000.

6. How does the Vermont CTC differ from the federal CTC?

• Age Limit: Vermont’s CTC applies to children under six, while the federal CTC covers children under 17.
• Refundability: Vermont’s credit is fully refundable, whereas the federal credit is only partially refundable.
• Identification Requirements: Vermont does not require SSNs or ITINs for qualifying children, unlike the federal credit. Vermont Department of Taxes

7. Can I claim both the Vermont and federal CTCs?

Yes, if you meet the eligibility criteria for both, you can claim both credits. This can provide substantial financial support to families with young children.

8. How do I claim the Vermont CTC?

To claim the credit:

• File a Vermont Income Tax Return: Use Form IN-111.NCSL+5VTLawHelp+5Vermont Department of Taxes+5
• Complete Necessary Schedules: Provide information about qualifying children and calculate the credit amount.
• Submit by the Deadline: Ensure your tax return is filed by the state’s deadline to avoid penalties or delays.

For part-year residents, the credit amount will be prorated based on the portion of the year they resided in Vermont. Vermont Department of Taxes

9. What documentation is required to claim the Vermont CTC?

You need to provide documentation of your income sources, such as:Vermont Department of Taxes

• Form W-2 wage statementsVermont Department of Taxes
• Periodic pay statementsTax Credits for Workers and Families+3Vermont Department of Taxes+3Vermont Department of Taxes+3
• Check stubsVermont Department of Taxes

If you or your child do not have an SSN or ITIN, you must complete a “Pro Forma” Federal Form 1040 reporting all income sources. Vermont Department of Taxes

10. Can families with no income claim the Vermont CTC?

Yes, Vermont’s CTC is fully refundable, meaning families with little or no income can still receive the full credit amount, provided they meet the eligibility criteria.

11. What if my child turns six during the tax year?

If your child is six years old or younger at the end of the tax year, you are eligible to claim the credit for that child.

12. Are there any recent changes to the Vermont CTC?

Yes, legislation has been proposed to expand the age eligibility for the CTC from five to six years old, allowing more families to benefit from the credit. LegiScan

13. How does the phase-out of the Vermont CTC work?

For every $1,000 (or fraction thereof) that your AGI exceeds $125,000, the credit is reduced by $20. This means that at an AGI of $175,000, the credit is fully phased out.

14. Can I claim the Vermont CTC if I moved to the state mid-year?

Yes, part-year residents can claim the Vermont CTC. However, the credit amount will be prorated based on the portion of the year you resided in Vermont.

15. Are there other child-related tax benefits in Vermont?

Yes, Vermont offers several other tax credits for families, including:

• Child and Dependent Care Credit: Worth 72% of the federal credit and fully refundable.
• Earned Income Tax Credit (EITC): Vermont’s EITC is 38% of the federal EITC amount.

16. What is the impact of the Vermont CTC on child poverty?

The Vermont CTC has a proven track record of reducing childhood poverty and providing greater financial stability for families. By offering a refundable credit, it ensures that even low-income families receive financial support. Vermont Department of TaxesThe Washington Post

17. Do I need to file a federal tax return to claim the Vermont CTC?

While you don’t need to file a federal tax return with the IRS, Vermont requires a “Pro Forma” Federal Form 1040 to calculate your federal AGI, which is used in determining your eligibility for the state credit. Vermont Department of Taxes

18. Can I claim the Vermont CTC if I don’t have a Social Security Number?

Yes, Vermont allows individuals without an SSN or ITIN to claim the CTC, provided they complete the necessary documentation, including a “Pro Forma” Federal Form 1040 and provide proof of income. Vermont Department of Taxes

19. What happens if I claim the Vermont CTC incorrectly?

If you claim the credit without meeting the eligibility criteria or provide incorrect information, you may be required to repay the credit amount and could face penalties. It’s essential to ensure all information is accurate and complete when filing.

20. Where can I get assistance with claiming the Vermont CTC?

For personalized assistance:

• Consult a certified tax professional.
• Visit the Vermont Department of Taxes website for resources and tools.
• Utilize free tax preparation services available in your community.