Governor Ned Lamont has announced the implementation of three significant tax relief measures in Connecticut at the beginning of 2024. These measures, stemming from the fiscal year 2024-2025 state budget, include the largest income tax reduction in state history, an increase in the Earned Income Tax Credit (EITC) for low-income workers, and an expansion of exemptions on certain pension and annuity earnings to benefit seniors. The total tax reduction is estimated at approximately $460.3 million, reflecting the state’s commitment to providing relief to middle-income workers, low-income workers, and seniors. Governor Lamont attributes these tax cuts to the fiscal discipline implemented over the past five years, stabilizing the state’s fiscal situation and ending years of deficits.
Starting January 1, 2024, Connecticut’s income tax rates will decrease, marking the first rate reduction in the state since the mid-1990s. The reduction targets middle-class tax filers, capping benefits at $150,000 for single filers and $300,000 for joint filers, and is estimated to benefit over one million tax filers. Additionally, the EITC for low-income workers will increase from 30.5% to 40% of the federal EITC, providing an additional $44.6 million in state tax credits to around 211,000 low-income filers. The third measure involves an expansion of deductions for certain IRA distributions and pension and annuity earnings for seniors, benefiting approximately 300,000 filers.
Governor Lamont emphasizes that these tax relief measures are made possible by prudent financial management, and the state’s fiscal guardrails are expected to ensure revenue growth surpasses fixed costs for the coming years. The changes align with Connecticut’s commitment to creating a more equitable tax structure, providing meaningful relief to a broad spectrum of taxpayers.
