Gov. Ned Lamont officially announced a proposal Monday to lower taxes that could effectively reduce the state income tax liability to zero for families making less than $50,000. Families making less than $40,000 could see a tax rebate, according to the Democrat.
Most middle-class joint filers could see up to $600 in tax relief — and single filers $300 — each year. The Lamont administration believes this would total $440 million in tax relief statewide.
The governor hopes to accomplish the tax cuts with two complementary proposals. One would reduce state income tax rates, and the other would permanently expand the state’s earned income tax credit. If enacted, some of these changes could take effect as soon as 2024.
Lt. Gov. Susan Bysiewicz said the proposal also aims to support women-owned businesses.
Tamika Mitchell, owner of Perfect Poundcakes Bakery in East Hartford, said she plans to use the funds to offset inflation costs.
“I think it's gonna be a good cut,” she said. “Any type of additional funds in your pocket, we can allocate those resources accordingly, so every penny helps."
In a statement shared with Connecticut Public, state Rep. Holly Cheeseman of East Lyme, the top House Republican on the legislature's tax-writing committee, said that working families deserve tax relief amid higher inflation and that the proposal echoes similar Republican propositions.
“I look forward to working with the governor on taxes, hoping we provide much-needed relief to residents struggling to pay for essential goods and services,” she said.
Bysiewicz considers the announcement historic, saying it’s the first time that the state income tax has been cut since the mid 1990s.
State officials say that Connecticut can afford a tax cut because of several years of budget surpluses. The state has been shoring up its pension fund as well.
“We've had more than $7 billion directed to our budget reserve fund,” Bysiewicz said. “And after four consecutive years we have surpluses totaling over $2 billion each year. So we've been able to fully recapitalize that budget reserve funds."
The state income tax rate on the first $10,000 of an individual's adjusted gross income, or $20,000 for a couple, would fall from 3% to 2%. Then individual adjusted gross income up to $50,000, or $100,000 for a couple, would see a rate drop from 5% to 4.5%. Bysiewicz said this would mean 63% of income tax filers would get tax relief.
Lamont is scheduled to deliver his annual budget address to the General Assembly on Wednesday at noon.
