Cut your tax bill by $450 a year? CT lawmakers pushing child tax credit – but there’s a catch
A new child tax credit could slash middle-class families' tax bills by $450 a year. But a new "millionaire's tax" would pay for it – leading to a budget battle with Gov. Ned Lamont.
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How does an extra $450 a year sound?
That’s how much some parents could save under a new child tax credit that Democrats are pushing at the state Capitol.
But there’s a catch.
To pay for it, taxes would go up for Connecticut’s wealthiest families – an idea facing stiff opposition from Gov. Ned Lamont.
“IT’S VERY EXPENSIVE”
Eluvia Barios and her grandchildren hit the playground in Norwalk on Thursday.
“We decided to come to the park because it’s a beautiful day,” she said.
A day at the park is a cheap way to have fun. Barios said that raising kids is much costlier than when she did it.
“Oh my gosh,” she said. “These days it’s very expensive.”
CHILD TAX CREDIT?
Now, families could finally get some help.
Connecticut lawmakers just advanced a new child tax credit as part of a two-year tax package.
Parents could claim $150 each, for up to three children. The credit phases-out for couples making more than $200,000 a year, and single parents making more than $100,000.
It would begin with the 2026 tax year and could save families $82.7 million per year, according to a nonpartisan fiscal analysis.
“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.”
“ROBIN HOOD” PLAN?
A tax break for parents may sound great, but there’s a catch. To pay for it, the wealthy would have to pay more.
Millionaires would get hit with a new 1.75% capital gains tax until 2029. If you make $25,000 in the stock market, you would owe an extra $437 in taxes.
Filers would get a one-time exemption for selling their home or business.
“It's about fairness,” said state Rep. Jason Doucette (D-Manchester). “Working poor in this state pay an effective tax rate of between 20 and 40% of their overall income, whereas the wealthiest in this state pay around 7%.”
Republicans blasted the idea.
“It's always a tax,” said state Rep. Joe Polletta (R-Watertown). “What about if we look at some reductions? Why do we always have to propose a tax?”
Even moderate Democrats are wary. Two of them voted against the capital gains surcharge on the General Assembly’s tax-writing committee.
“Now is not the time to raise taxes,” said state Rep. Jill Barry (D-Glastonbury).
But with Connecticut potentially facing more than $1 billion in cuts from the Trump administration, Democratic leaders said that it’s time for drastic action.
“We shouldn’t sit here and pretend that we’re living in ordinary times. We are not,” said state Rep. Maria Horn (D-Salisbury). “We are looking ahead at more significant cuts.”
BUDGET BATTLE WITH LAMONT
Parents shouldn’t count on the tax credit yet. Lamont is vowing to fight any tax increase on the wealthy.
“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.”
Back at the playground, Barios doesn’t think $150 per child will make a big difference anyway.
“Yeah, it’s nothing,” she said. “I think a little more for the kids.”
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.
