HARTFORD, Conn. (WTNH) — Gov. Ned Lamont (D-Conn.) announced his two-year budget proposal would include increasing Connecticut’s Earned Income Tax Credit (EITC) from 30.5% of the federal credit to 40%.
During a press conference Monday, the governor said increasing the rate would provide an additional $44.6 million in state tax credits to approximately 211,675 qualifying low-income households above the amount currently received.
“These are people who work every day,” Lamont said. “Sometimes working double jobs doing what they can to get by.”
The Connecticut EITC is a refundable state income tax credit for low-income working individuals and families that mirrors the federal EITC. Increasing the rate to 40% would make Connecticut among the top five states in the U.S. with the largest EITC rates. The highest tax refund for the working poor is in Maryland at 50%.
“It encourages people to work, and it encourages people to help people make ends meet,” said the Department of Revenue Services’ Commissioner Mark Boughton. “They can use this new money to pay a heating bill, put a tank of gas in the car for a month or pay for an education, or for job training, whatever they feel is necessary to better their family.”
The federal income eligibility requirements for 2022 are:
- No dependents: $16,480 for individuals and $22,610 for married filing jointly
- One dependent: $43,492 for individuals and $49,622 for married filing jointly
- Two dependents: $49,399 for individuals and $55,529 for married filing jointly
- Three dependents: $53,057 for individuals and $59,187 for married filing jointly
The Lamont administration said the amount of each household’s credit is need-tested and depends on the size of its federal credit, which the IRS calculates based on taxpayers’ income, marital status, and the number of qualifying children.
The governor’s office said that under the current rate of 30.5%, a married family with two qualifying children receives a state tax credit of up to $1,880. If the rate were 40%, that same family would receive a state tax credit of up to $2,465 — an additional $585.
“They may not have state income tax liability because their incomes are often so low that they are not at the liability when it kicks in, but they are, in fact, taxpayers,” State Senate President Pro Tempore Martin Looney (D) said. “They are paying property tax through their rent, most of them are renters, they are paying the gasoline tax, they are paying a sales tax at an amount disproportionate to their income. Every other tax you can imagine. This refundable credit makes life more livable for those struggling every day.”
The proposal is part of a two-year budget proposal. Whether it is permanent or has bipartisan support is debatable.
For Nellie Jara, a cancer survivor who struggles to pay her medical bills, any help is appreciated.
“Many of us are women of color, are working long hours, for a low wage and little to no benefits,” she said. “The permanent expansion of the earned income tax credit will directly support working families like mine.”
“Those resources coming back into the community are going to lift up families,” Hartford Mayor Luke Bronin (D) said.
Republicans in the state Senate say, “We look forward to working with the governor to implement policies that will provide widespread tax relief. At the same time, we must preserve the fiscal guardrails that are starting to finally put our state on better financial footing.”
The Connecticut EITC was created in 2011 and has had varying rates over the last decade, according to Lamont’s office.
- 2011: 30%
- 2012: 30%
- 2013: 25%
- 2014: 27.5%
- 2015: 27.5%
- 2016: 27.5%
- 2017: 23%
- 2018: 23%
- 2019: 23%
- 2020: 23%
- 2021: 30.5%
- 2022: 30.5%
The proposal is estimated to cost the state $45 million annually.
Lamont will deliver his annual budget address to the General Assembly on Wednesday, Feb. 8, at noon.