State taxes: How to save with credits on state returns

Tax season is almost over and those who have yet to file may be looking for as many credits as possible to get cash back from the Internal Revenue Service.

The average tax refund issued by the IRS as of March 1 is $3,182, a 5.1% increase compared to the similar filing period in 2023. The trend may not hold as refund amounts dropped 13% between March and April in 2023, according to Barron's.

While some filers may focus on the federal half of the assignment, there are credits to be found in state tax codes as well.

Some states have different rules about what is and isn't taxed, especially around Social Security income, but there are opportunities to lower a filer's state tax liability.

Here are some state tax credits that may help you get money back when you file.

California

The state of California offers multiple credits for residents who file returns.

The California Earned Income Tax Credit may provide up to $3,529, while the Young Child Tax Credit and the Foster Youth Tax Credit may provide a $1,117 rebate.

State residents may also claim rebates for living in areas that experienced a disaster declared by the President. If a filer needs to receive copies of a previous tax return due to a disaster they can be sent, for free, by filing a FTB 3516 form.

Colorado

Eligible filers in the state of Colorado can receive an $800 refund per person as a part of the state's Taxpayer's Bill of Rights (TABOR) mechanism. A bill passed into law in 2023 applied the mechanism equally to all qualified individuals, moving it away from the sales tax mechanism for this filing year.

In order to qualify a filer must be:

  • At least 18 years old when the tax year began

  • Does not have a Colorado income tax liability

  • Are not claiming a refund of wage withholding

  • Are not otherwise required to file a Colorado return because you have no federal filing requirement

Low income, disabled or older residents may qualify for the rebate by filing a 2023 Property Tax/Rent/Heat (PTC) Rebate Application in lieu of a tax return.

A man works on his taxes in a room
A man works on his taxes in a room

Oregon

Oregon taxpayers may qualify for the state's "kicker" tax credit. The credit, passed into law in 1979, goes into effect when the state's General Fund revenues are more than 2% of what was projected.

  1. File your 2022 Oregon return before you file your 2023 return.

  2. Have an Oregon tax liability for 2022.

  3. File a 2023 Oregon return, even if you don't otherwise have a filing requirement.

Filers can estimate their "kicker" credit by multiplying their 2022 tax liability – before any credits – by 44.28%, according to the state.

Washington

Washington state offers a "Working Families Tax Credit" modeled on the federal Earned Income Tax Credit.

Filers who qualify for the federal credit qualify for the state credit, as well as those who, "filed a federal income tax return for the prior federal tax year using a valid individual taxpayer identification number in lieu of a social security number."

Any family that qualifies for the credit will receive $50 at minimum. The maximum credit a family can receive are:

  • 0 children: $315

  • 1 child: $625

  • 2 children: $940

  • 3 or more children: $1,255

This article originally appeared on USA TODAY: Here's how to save on your state tax returns

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