Governor Lamont orders Connecticut’s earned income tax credit for 2020 retroactively increased to 41.5% using federal coronavirus relief funds
Nearly 200,000 low to moderate income individuals and families will benefit from a significant increase in state income tax credits
(HARTFORD, CT) – Governor Ned Lamont today announced that he is directing the Connecticut Tax Services Department to retroactively improve the 2020 Connecticut Earned Income Tax Credit (EITC) by 23% of the credit federal at 41.5%. The additional state tax refund will provide the necessary economic support to working individuals and families with low to moderate incomes and disproportionately subjected to COVID-19 and its negative economic impacts.
The improvement will benefit 198,708 households who earned up to $ 56,844 in 2020 and applied for this year’s EITC. Each household’s enhanced credit amount is assessed based on need and depends on the size of its federal credit, which the IRS calculates based on taxpayer income, marital status, and number of eligible children. For example, a single parent of two children at the federal poverty line who received a state credit of $ 1,246 in the spring will now receive an additional $ 1,002 for a total state credit of $ 2,248.
The $ 75 million cost of the enhanced credit will be covered by the latest portion of the state’s $ 1.38 billion Coronavirus Relief Fund, made available through the federal CARES Act. Connecticut previously used its coronavirus relief fund to purchase PPE, expand access to testing, and support schools, small businesses, nonprofits, nursing homes, hospitals, tenants, homeowners, public colleges and municipalities facing the unexpected costs of COVID-19.
Enhanced Connecticut 2020 Earned Income Tax Credit offers direct relief to workers doing their best to support their families while facing pandemic costs, masks and testing childcare and internet access ” Governor Lamont said. “The recent bipartisan budget increased this credit in the future because numerous studies show it to be one of the best poverty reduction tools we have. The EITC encourages work, strengthens economic stability and uplifts future generations. Ultimately, these tax credits improve entire communities because those dollars are reinvested directly into our local economy. I thank the exceptional Congressional delegation from Connecticut and our partners in the US Department of the Treasury for giving us the tools we need to improve credit last year during this time of economic uncertainty for so many.
“With strong financial support from the federal government to the state to help fight the COVID-19 pandemic, Connecticut has implemented one of the best screening and vaccination programs in the country,” Connecticut Bureau of Policy and Management secretary Melissa McCaw said. “Our hard work, strong budget stewardship and monitoring of these dollars have paid off, allowing us to leverage the remaining coronavirus relief funds to put more money in the pockets of those deeply affected by pandemic and could really use our support. The EITC is one of the most effective programs to provide support to hard-working families who have experienced enormous economic uncertainty, many of whom have done the work that has kept our state and its economy in turmoil throughout. this public health crisis. We are grateful to our federal partners for the resources and the ability to extend this benefit to our friends, family and neighbors who are struggling to make ends meet and support their families and we hope they will. will bring some security in the New Year. “
“This improvement – made possible by federal funds from the CARES Act – relieves working families and lifts thousands of children out of poverty,” Members of the Connecticut congressional delegation said in a joint statement. “It is also a force multiplier for the economic recovery in our state. We will continue to fight for investments like these that put money back in the pockets of Connecticut families. “
The governor particularly credited Pro Tempore Senate Speaker Martin M. Looney (D-New Haven), who successfully fought to create and increase the Connecticut Earned Income Tax Credit to make the tax system of the more progressive state and to lighten the families of workers.
“Passage of Connecticut’s earned income tax credit was only secured after a long uphill battle against opposition from Republican governors.” Senator Looney said. “Our EITC is now helping hundreds of thousands of Connecticut residents. The governor’s expansion of the EITC will lift more workers out of poverty and put more money back into our local and national economies. I want to thank Governor Lamont for taking this step to help needy families in Connecticut who have suffered tremendously during the height of the pandemic. “
“The EITC is lifting Connecticut’s working families and children out of poverty, and thanks to Governor Lamont, these families are poised to receive a much needed extra boost when they need it most.” State Representative Sean Scanlon (D-Guilford), co-chair of the finance committee, said.
The enhanced credit will provide additional support to children lifted out of poverty through the 2021 federal child tax credit, which expires this week. Connecticut households benefiting from the enhanced credit are home to more than 220,000 children and other dependents. Nationally, 97% of federal EITC benefits go to families with children.
The Connecticut Tax Services Department plans to issue checks for the additional credit to eligible households before the end of February.
“The Department of Revenue Services is proud to administer the Connecticut Earned Income Tax Credit, which puts money back in the pockets of hard-working families.” Connecticut Department of Tax Services Commissioner Mark D. Boughton said. “I congratulate Governor Lamont for this important investment in the working families who continue to support Connecticut and contribute to our return. “
The Connecticut Earned Income Tax Credit was established in 2011 and has had variable rates for the past decade, including 30% in 2011 and 2012, 25% in 2013, 27.5% from 2014 to 2016 and 23% from 2017 to 2020.
The rate was recently raised to 30.5% under the state’s biennial budget for fiscal year 2022-2023 as Governor Lamont signed in law in June. This newly enacted increase brings Connecticut’s rate higher than neighboring states of Massachusetts and New York, which are both at 30%.
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