The Working Families Tax Credit: A Sustainable Solution for Millions of New Yorkers
Across the state, New Yorkers have struggled to afford an ever-increasing cost of living. While New York has a high median income, it also has an extraordinary level of income inequality, with both large concentrations of millionaires and some of the highest child poverty rates in the country. That makes it all the more urgent to modernize and expand the tax credits aimed at putting more money in the pockets of New York’s working class families.
In January 2025, New York Governor Kathy Hochul proposed a temporary expansion to the Empire State Child Credit (ESCC) that would provide an average added annual benefit of $530 per family to low- and moderate-income New Yorkers for three years. That would be a great step in the right direction when it comes to putting money in New Yorkers’ pockets and working to end child poverty in the state, and would cover 17 percent of all New York taxpayers. Even still, we can do more to reduce child poverty in the long run and create a sustainable tax benefit for more New Yorkers.
An even better solution is the Working Familiy Tax Credit (WFTC), which would combine the Empire State Child Credit and Earned Income Tax Credit, as well as making other changes to the tax code, to create one, cohesive benefit. This simplified and expanded single credit would serve millions of New Yorkers.
The highlights of the WFTC include:
- Increasing the maximum credit to $1,600 per child for the lowest income New Yorkers
- A minimum credit of $500 per child for all low- and middle-income families
- Eliminating the harmful wage minimum in the current system that keeps many families from receiving any benefits
- Creating a permanent solution that does not disappear after three years
The Working Families Tax Credit would go beyond the ESCC by removing exclusions for parents of older teens, and the lowest-income families, and it would go beyond the EITC by including ITIN filers. And, as the Niskanen Center observes, “By doubling the phaseout threshold for married couples, streamlining the phaseout rate…, and phasing credits down but not out altogether, the WFTC substantially reduces work and marriage penalties for families.” Overall, the Working Families Tax Credit would cover 23 percent of tax filers, with an average additional benefit of $1,200 by the time it is fully phased in in 2029, according to an analysis prepared for Immigration Research Initiative by the Institute for Taxation and Economic Policy.
For more information, see our report and infographics:
A Better Solution for More New Yorkers: Working Families Tax Credit vs. ESCC
WFTC Benefits to the Capital District
WFTC benefits for New York City