Connecticut increases Earned Income Tax Credit

(The Center Square) – Low-to-moderate income individuals and families in Connecticut are set to have a little extra cash in their pocket come tax time.

As part of the state’s 2022-23 biennial state budget, Gov. Ned Lamont raised the Earned Income Tax Credit to the federal credit rate of 30.5%, a 7.5% increase designed to provide qualifying individuals and families with a larger tax refund.

The initiative will allow an additional $40 million sent to more than 195,000 households that are eligible for the tax credit.

“Increasing the rate of the Connecticut Earned Income Tax Credit is one of the most impactful provisions in the newly enacted state budget because it will provide direct relief to low-to-moderate income workers who are providing for their families,” Lamont said in a news release.

Lamont said numerous studies “have shown that this tax credit is one of the best anti-poverty tools” the state can use “because it encourages work, boosts economic stability, and uplifts generations to come.”

Bruni Pizzaro, executive director of Junta for Progressive Action, said in a news release, “the credit will help families have more money in their pockets for medical care, food and other needs.”

In order to be eligible for the tax credit, taxpayers must have eligible earned income and adjusted gross income less than:

$51,464 ($57,414 married filing jointly) with three or more qualifying children.

$47,915 ($53,865 married filing jointly) with two qualifying children.

$42,158 ($48,108 married filing jointly) with one qualifying child.

$15,980 ($21,920 married filing jointly) with no qualifying children.

Lamont credited Sen. Martin Looney, D-New Haven, who serves as president of the Senate, for advocating for the measure.

“For years I have fought to make our tax system more progressive and provide relief for workers in Connecticut,” Looney said. “While the tax credit fluctuated during tough budget times, the new state budget increases the rate for the first time since enacted, providing for a 32.6 percent increase.”

The state’s Earned Income Tax Credit was established in 2011 and has featured various rates over the past 10 years. Originally the credit was set at 30% and declined to 25% in 2013; it was set at 27.5% from 2014-16 and has been situated at 23% since 2017.

With the new rate, a family with two children who qualify for the tax credit would receive up to $1,824 from Connecticut, a $462 increase from 2020.

Lamont said the tax credits will “improve entire communities because these dollars are being invested right back into our local economy through groceries, transportation, clothing, rent, utilities and other necessary expenses.”

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