(HARTFORD, CT) – Governor Ned Lamont today signed legislation enacting the biennial state budget for fiscal years 2024 and 2025 (House Bill 6941), which includes various tax relief measures for Connecticut residents, including the largest drop in the income tax in state history.
Among The Tax Reduction Schemes Are:
A middle-class income tax cut lowers the two lowest marginal rates. The 3% charge on the first $10,000 earned by individuals and the first $20,000 earned by couples will be reduced to 2%. The 5% rate on earnings over $40,000 for individuals and $80,000 for couples will be reduced to 4.5%. Individual filers earning $150,000 and couples earning $300,000 will be eligible for these benefits. It is projected that the tax savings will benefit one million taxpayers.
An increase in the Earned Income Tax benefit for low-income workers from 30.5% to 40% of the federal benefit. The Earned Income Tax benefit (EITC) is a refundable state income tax benefit for low-income working individuals and families that is equivalent to the federal credit. This move will result in an additional $44.6 million in state tax credits being distributed to an estimated 211,000 low-income taxpayers. Connecticut is now one of the top five states in the country in terms of Earned Income Tax Credit rates, with a new 40% rate.
Extending current exclusions on certain pension and annuity incomes to help the elderly. The budget, in particular, eliminates the retirement income tax cliff by introducing a phase-out for allowed pension and annuity, and IRA distribution deductions from personal income tax.
Governor Lamont Signed A Budget To Provide Tax Relief To Middle-Class And Working-class Taxpayers
“I am able to sign a budget today that implements the largest cut to Connecticut’s income tax ever made because of the fiscal discipline that we implemented over the last several years to stabilize our fiscal house and end what has been too many years of uncertainty and deficits,” Governor Lamont said. “We specifically targeted these tax cuts and credits for middle-class and working-class taxpayers because we want to provide the broadest-based relief possible to those in need.” I am pleased to sign legislation that will provide tax relief to our folks.
“I am particularly proud that we were able to negotiate and pass this budget in a bipartisan manner, with both Democrats and Republicans actively participating,” the governor said. “I am fully aware that in this current political climate, Connecticut is an outlier among states, and I do not take that for granted.” We are strengthening Connecticut and enacting policies that benefit the people who live here by working together productively. I appreciate the work of legislative leaders on both sides of the aisle on this biennial budget.”
Budget investments to watch:
Education
Primary and secondary education
- Increases Special Education spending by $25 million in fiscal years 2024 and 2025.
- Provides $48 million in the fiscal year 2024 and $96 million in the fiscal year 2025 to continue the phase-in of the Education Cost
- Sharing (ECS) formula.
- Provides $6.6 million in the fiscal year 2024 and $13.2 million in the fiscal year 2025 to protect communities against ECS losses.
- Provides $150 million for education finance reform in fiscal year 2025.
Childcare
- Provides $14.2 million in fiscal years 2024 and 2025, respectively, to cover fee increases of 11% for licensed providers and 6% for unlicensed providers in the Care4Kids system. This is complemented by a $35 million American Recovery and Reinvestment Act (ARRA) funding.
- Increases Infant Pre-K rates in School Readiness and Child Day Care Contract programs by $15.5 million in the fiscal year 2025.
Higher Learning
- Provides funding for the state’s share of collective bargaining raises for all constituent units.
- Increases one-time operating funding by more than $500 million throughout the biennium to assist the University of Connecticut and Connecticut State Colleges and Universities in transitioning back to a sustainable level of state support.
- Restructures fringe benefit funding to constituent units in order to avoid passing on the state’s unfunded pension liabilities to students and to make institutions more competitive for federal subsidies.
- $6 million is set aside for student loan repayment.
- PACT receives permanent financing, and PACT is expanded to accommodate students returning to college after previously enrolling. Raises the minimum PACT reward amount.
Housing
- Provides $810 million in capital funding for housing development and financial assistance over the biennium, including:
- $150 million (annually $75 million) for the state’s popular Time-To-Own program. This level of assistance is estimated to help more than 1,250 people buy homes each year.
- $200 million ($100 million per year) to increase workforce development housing, which will give an extra 2,000 apartments.
- $200 million for the Housing Trust Fund ($100 million per year), with a focus on multi-unit housing in downtown locations near public transportation.
- $200 million for flexible housing ($100 million each year).
- $50 million for the Housing Receivership Fund ($25 million every year). This grant will offer state resources for the renovation of existing housing that has been placed under receivership by a court of law.
- $10 million (annually $5 million) for low-interest loans to Time-To-Own awardees for unexpected capital renovations to their newly purchased homes.
- Provides $2 million in ARPA funds exclusively in FY 2024 to invest in the flexible financing subsidy pool of housing and homeless support to subsidize housing and provide flexible assistance to enable people, families, and youth to overcome financial barriers and accelerate homelessness solutions.
- Provides $1 million in ARPA monies for housing support services in both FY 2024 and FY 2025.
- In FY 2024, ARPA monies will be used to fund various housing initiatives totaling $10 million.
- Provides $1.1 million in General Fund monies in FY 2024 and $1.38 million in FY 2025 for the 24-hour operation of the 2-1-1 Housing Crisis line.
- Provides $5 million in the General Fund for shelters in fiscal year 2024.
Nonprofits
Private service providers
- An additional $206.6 million is provided over the biennium to enhance private providers.
- Each fiscal year, $53.3 million is allocated to all private providers, including those contracted by the Department of Developmental Services, representing a 2.5% increase.
- Each year, $50 million is allocated to Department of Developmental Services-contracted providers, representing a 4.5% increase.
- Capital funding for the Nonprofit Grant Program ($25 million in fiscal year 2024, $25 million in fiscal year 2025):
- Facility improvements to improve health, worker safety, and quality of care.
- The program and subsequent rounds of financing will be overseen by a new dedicated job in the Office of Policy and Management.
Support for people with autism and intellectual/developmental disabilities
- Establishes a lead planning role and committed personnel in the Office of Policy and Management to examine the continuum of autism services provided by state agencies and school districts, identify gaps, and coordinate services.
- Positions are being added to the Office of Policy and Management to coordinate programs and services for people with intellectual or developmental disabilities other than autism.
- Increases funding for the Department of Developmental Services caseload ($44.0 million over the biennium):
nearly the biennium, day services for nearly 900 age-outs and high school graduates will be provided ($7.3 million in FY 2024 and $17.5 million in FY 2025). - Over the biennium, residential supports for over 188 age-outs and Money Follows the Person transitions will be provided ($5.8 million in FY 2024 and $13.4 million).
- Increases funding for the Department of Developmental Services caseload ($44.0 million over the biennium):
- Adds $21.1 million during the biennium to alleviate waiting lists for residential services at the Department of Developmental Services.
- By 2026, a total of 320 new autism waiver spots will be added.
- Enhances transition programs in the Departments of Aging and Disability programs and Developmental Services for kids who have graduated from high school.
- Provides one-time funding ($5.6 million) and a gradual rebasing to reflect real costs ($1.9 million FY 2024, $2.1 million FY 2025) to stabilize intermediate care, facility providers.