Gov. Ned Lamont is not fond of making the child tax credit permanent, but he’s in favor of cutting state income taxes for an estimated 211,000 working poor families.
Next month, Lamont will propose bringing the state Earned Income Tax Credit up to 40%, making it among the top five states in the nation with the largest EITC rates.
The move, if it’s accepted by the legislature, will provide an additional $44.6 million in tax credits, which is on average about $211 more per family, depending on family size and income.
A family of three making less than $59,000 a year would receive the credit.
He said typically families with children receive more than 95% of all EITC dollars.
“Increasing this tax credit is one of the most impactful things we can do to target direct relief to low-income workers who are providing for their families, especially those with children,” Lamont said Monday.
Connecticut’s current credit is 30.5%. Connecticut’s EITC was launched in 2011 at around that rate, but was whittled down as budgets sank into deficits.
Lamont increased the credit again in 2021 and if the legislature adopts his proposal it would increase it to 40% for 2023.
“Numerous studies have shown that the EITC is one of the best anti-poverty tools we can use because it encourages work, boosts economic stability, and uplifts generations to come,” Lamont said. “Ultimately, this tax credit helps 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.”
At 40%, Connecticut’s EITC would be more generous than each of its neighboring states, including Massachusetts (30%), New York (30%), and Rhode Island (15%).
While Democrats are likely to support a higher EITC, they also want to make last year’s child tax credit permanent.
State Comptroller Sean Scanlon has proposed a $600 per child tax credit, which would cost the state about $450 million.
Lamont is also expected to offer to reduce the state income tax rate for those making less than $200,000 per year, which would capture more middle-class households than the EITC.