New year, new tax cuts for Connecticut residents
Christmas is just a few days away, but the real present comes on Jan. 1 – when the biggest tax cut in Connecticut history kicks in.
The is the first state income tax cut since the 1990s. But some groups say it's coming at the expense of those who can least afford it.
HISTORIC TAX CUT
The new year doesn't just mean fireworks. In 2024, it will also mean major tax relief.
Both parties took a year-end victory lap on the bipartisan effort at the state Capitol on Wednesday.
"We're not a cheap state," said Gov. Ned Lamont. "And we're doing everything we can to make life a little more affordable for our folks."
State income taxes will drop 0.5- 1% on the lowest two tax brackets (the first $50,000 of gross income). That's about $50 a month extra in your paycheck.
"Taxpayers may be wondering, 'Well, what does this mean for me?'" said Lt. Gov. Susan Bysiewicz. "Depending on your gross income, joint filers could see almost $600 [per year] in income tax relief."
EXTRA RELIEF FOR FAMILIES, SENIORS
The tax cuts are targeted at lower- and middle-class families. They phase out for wealthy earners.
In addition, the working poor are getting even more relief – thanks to a bigger Earned Income Tax Credit. Because the EITC is a refundable credit, filers making less than $50,000 per year won't owe any state income taxes next year. The change is expected to help 211,000 low-income filers, according to Lamont's office.
"Merry Christmas!" said state Rep. Vin Candelora (R-North Branford), the Connecticut House minority leader. "I think this is a good day to have a press conference like this, going into the new year where people are going to see that tax relief."
Seniors will save more too. Most retirement income will now be exempt from taxes.
"What my parents are able to do is stay in the city of Norwalk – close to my family and my kids," said state Sen. Bob Duff (D-Norwalk), the state Senate majority leader.
Not every tax cut proposal made it, though. Lawmakers rejected a Child Tax Credit specifically aimed at parents. Businesses also did not get tax cuts they requested.
ARE TAX CUTS WORTH IT?
The sweeping tax relief is possible because of strict spending limits, called "fiscal guardrails," that have allowed Connecticut to rack up billions in surpluses over the past few years.
"For years, our fixed costs were going like that [pointing up] , and our revenues were going like that [pointing down] ," Lamont told reporters. "And that's a bad place to be."
But some groups say the fiscal austerity – and the tax cuts they made possible – aren't worth the cost.
Nonprofits that provide a laundry list of critical services complain they got shortchanged in the state budget. And the Connecticut State Colleges and Universities system just raised tuition 5% while cutting faculty and course offerings – to fill a $140 million budget deficit.
"If it's going to cost more, it's going to kind of put a bigger gap between the kids that want to go to college and stuff," said Aidan Springer, a student at Connecticut State Community College's Norwalk campus. "It's already such a difficult thing."
State Comptroller Sean Scanlon said he understands the concerns but argued that paying down pension debt will free up more money in the long run. He said the state has already saved $650 million in loan payments.
"We've been having some good days recently," Scanlon said. "That's because we've been disciplined. We're taking our medicine; we're doing the right thing. And as a result of that, we will continue to see more progress, but we'll also be able to give more relief to the people who need it."
Republican leaders also said, thanks to spending discipline, these tax cuts are sustainable.
"Connecticut taxpayers, for too long, saw tax breaks taken away when the state hit the economic rocks," said state Rep. Holly Cheeseman (R-East Lyme), the top Republican on the legislature's tax-writing committee.