HARTFORD – Governor Ned Lamont orders the state’s tax services department to retroactively improve the 2020 Connecticut earned income tax credit from 23 percent of the federal credit to 41.5 percent.
The additional state tax refund will provide the necessary economic support to low to moderate income working individuals and families disproportionately overburdened by 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.
“Improved 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 child care and Internet access, ”Governor Lamont said. “The recent bipartisan budget increased this credit in the future, as numerous studies show it to be one of the best anti-poverty 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 in our local economy.
“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,” the secretary said. from the Office of State Policy and Management, Melissa McCaw. “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 in providing support to hard-working families who have experienced tremendous economic uncertainty, many of whom have done the work that has kept our state and its economy in turmoil throughout. of 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 provide for their families and we hope it will. will give them some security in the New Year. “
“This improvement – made possible by federal funds from the CARES Act – is relieving working families and lifting 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 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 Department of Revenue Services staqte plans to issue checks for additional credit to eligible households before the end of February.
“The Tax Services Department is proud to administer the Connecticut Earned Income Tax Credit, which puts money back in the pockets of hard-working families,” said the Commissioner of the Tax Services Department of the United States. ‘State, Mark D. Boughton.
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 increased to 30.5% as part of the state’s biennial budget for fiscal year 2022-2023 that Governor Lamont promulgated in June.
The newly enacted increase brings Connecticut’s rate higher than neighboring states of Massachusetts and New York, which are both at 30%.