CT Democrats advance child tax credit, but wealthy could pay more
Middle-class families could claim $450 in child tax credits under the plan, but the wealthy would be hit with a new "millionaire's tax." The package sets up a budget showdown with Gov. Ned Lamont.
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Parents would save up to $450 a year under a tax package advanced by Connecticut Democrats on Wednesday evening.
But there's a catch.
To pay for it, the wealthy would actually pay more under a temporary "millionaire's tax". That sets up a budget battle with Gov. Ned Lamont, who opposes any tax hikes.
CHILD TAX CREDIT
The child tax credit would take effect with the 2026 filing year. Families could claim $150 per child for up to three children. It would phase out for couples making more than $200,000 per year or single parents earning $100,000.
“We have a responsibility as policymakers to make sure that the have-nots have something,” state Sen. Pat Billie Miller (D-Stamford) said.
Similar proposals have failed in previous years due to cost concerns.
“The Child Tax Credit will change lives, help to end child poverty and make Connecticut more affordable for working families like the one I grew up in," said state comptroller Sean Scanlon. "It's why I championed the idea of creating one in 2021, and it’s why I am so happy to see the Finance Committee advancing the creation of one today."
TAX HIKE ON THE WEALTHY
But not everyone would see tax relief. The rich would pay more.
The package adds a new 1.75% capital gains surcharge on single filers earning more than $1 million a year, and couples making more than $2 million, until 2029. Taxpayers would get a one-time exemption if they sell their home or business.
Republicans blasted the proposal.
“In ranking after ranking, Connecticut is one of the highest-taxed states in the country,” said state Sen. Ryan Fazio (R-Greenwich). "The people of this state have had enough tax increases."
Supporters said the tax could generate $284 million a year at time when Connecticut could lose a staggering $1 billion in federal funding. President Donald Trump has already frozen hundreds of millions earmarked for the state.
“We shouldn’t sit here and pretend that we’re living in ordinary times,” said state Rep. Maria Horn (D-Salisbury), co-chair of the General Assembly's tax-writing committee. “We are looking ahead at more significant cuts ahead.”
SHOWDOWN WITH LAMONT
The so-called "millionaire's tax" faces an uphill battle with Lamont, a multi-millionaire from Greenwich.
“We don’t need that. I don’t support that,” he told News 12 Connecticut on Wednesday. “We’ve eliminated taxes for our essential workers, working families. I’ve given a significant tax cut to middle-class families. We’ve done a lot to make our tax system more progressive.”
OTHER TAX PROPOSALS
The Democratic package includes other new tax breaks too.
Home day care owners could claim up to $500 in refundable income tax credits. And $5 million would be set aside for businesses that enter into Name, Image and Likeness (NIL) agreements with student-athletes.
Democrats also canned a tax on sodas and sugary drinks that led to strong pushback from restaurants and amusement parks.
WHAT’S NEXT?
The Legislature’s Finance, Revenue and Bonding Committee approved the tax package Wednesday evening.
The final budget, including a $55.7 billion spending plan that advanced on Tuesday, will now be negotiated with Lamont over the next six weeks.
