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📢 ICYMI! Governor Ned Lamont signed into law legislation enacting the fiscal years 2024 and 2025 biennial state budget (House Bill 6941), which contains several tax relief measures for Connecticut residents that includes the largest reduction in the income tax in state history. Learn more about the tax relief measures below:
✅ An income tax cut for the middle class that reduces the two lowest marginal rates. Specifically, the 3% rate on the first $10,000 earned by individuals and the first $20,000 by couples will decrease to 2%. The 5% rate on the next $40,000 earned by individuals and the next $80,000 by couples will decrease to 4.5%. These benefits will be capped at individual filers who earn $150,000 and couples who earn $300,000. It is estimated that one million tax filers will benefit from the rate cuts.
✅ An increase in the Earned Income Tax Credit for low-income workers from the current rate of 30.5% of the federal credit to 40%. The Earned Income Tax Credit is a refundable state income tax credit for low-income working individuals and families that mirrors the federal credit. This change will provide an additional $44.6 million in state tax credits to an estimated 211,000 low-income filers. This new 40% rate makes Connecticut among the top five states in the nation with the largest Earned Income Tax Credit rates.
✅ An expansion of existing exemptions on certain pension and annuity earnings to benefit seniors. Specifically, the budget eliminates the retirement income tax cliff by adding a phase-out for allowable pension and annuity and IRA distribution deductions against the personal income tax.
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