Despite rising COVID-19 cases nationwide, there is no fourth stimulus check in sight and the child tax credit ends this month. However, in Connecticut, the state legislature passed an expansion of earned income tax credit, which will benefit approximately 200,000 inhabitants. According to a report by BGR, this signifies a growing trend that future pandemic relief will be enacted at the state level.
Connecticut Governor Ned Lamond announcement last week, he ordered the state’s congressional delegation to retroactively increase Connecticut’s earned income tax credit in 2020. According to a report by The Hartford Current it went from 23% of the federal credit to 41.5%, meaning eligible taxpayers will receive an additional payment for their 2020 taxes when they file a tax return this year. The credit could save between $375 and $1,000 in spring tax refunds.
Thank you to Connecticut’s outstanding congressional delegation and our partners at the U.S. Treasury Department for giving us the tools we need to improve last year’s earned income tax credit during this time of economic uncertainty. for so many people. https://t.co/yRUYFb9iCZ
— Governor Ned Lamont (@GovNedLamont) December 29, 2021
The boost will apply to people who claimed the EITC in 2020 when it was open to anyone with an income of $56,844 or less. To check your own eligibility, see state website here. Lamont touted this tax credit as a lifeline for working families in Connecticut, saying, “It says we appreciate the work you do. The work should pay.” He and his supporters in state government say that money will mostly go to tenants with children, citing the US Census, and will be needed to catch up with bills and day-to-day expenses.
Connecticut’s budget surplus grew by more than $900 million in the last fiscal year, so Republicans in Lamont and Connecticut both demanded tax cuts. Of course, deciding how to make these reductions is a contentious issue, and a tax credit like this is seen as a back-up measure. However, many experts have pointed to similar tax credits available in other states – so much so that some believe state lawmakers are now in “competition” to create the most favorable living situation.
Neighboring New Jersey offers a similar 40% tax credit program, and other states are following suit. South Carolina has adopted an ambitious plan that will have increased its tax credit every year by 2023, and by the end of it, it will have increased to 125%. This means that the state will offer a larger earned income tax credit than the federal government.
Tax season begins at the end of this month in the United States, and relevant information can be viewed at the IRS website. For programs in your individual state, visit your state government website.