While the number of COVID-19 cases is rising across the country, there is no fourth stimulus check in sight and the child discount expires this month. At least in the state of Connecticut, the state legislature has approved an extension of the earned income tax credit, which will benefit approximately 200,000 residents. According to a report from BGR, this means a growing trend that future pandemic aid will be passed on at the state level.
Connecticut Governor Ned Lamond announced last week that he has instructed the state’s congressional delegation to retroactively improve Connecticut’s 2020 income tax credit. According to a report by The Hartford Courant it has been increased from 23 percent of the federal credit to 41.5 percent, meaning eligible taxpayers will receive an additional payout for their 2020 taxes when they file their tax returns this year. The credit can yield anywhere from $375 to $1,000 in tax refunds in the spring.
Thank you to Connecticut’s excellent congressional delegation and our partners in the US Treasury Department for providing us with the tools we need to improve last year’s state income tax credits during this time of economic uncertainty for so many. https://t.co/yRUYFb9iCZ
— Governor Ned Lamont (@GovNedLamont) December 29, 2021
The increase applies to people who claimed the EITC in 2020, when it was open to anyone with incomes of $56,844 or less. To check your eligibility, check the 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. Work should pay.” He and his supporters in the state government say this money will go primarily to renters with children, citing the US Census, and will be needed to catch up on bills and for day-to-day expenses.
Connecticut’s budget surplus has increased by more than $900 million in the past fiscal year, so Lamont and Connecticut Republicans have both been calling for tax cuts. Of course, deciding how to implement those cuts is controversial, and a tax credit like this is seen as a money-saving measure. However, many experts have pointed to similar tax credits available in other states — so much so that some believe state legislators are now “competing” to create the most favorable living conditions.
Nearby New Jersey offers a similar 40 percent tax-reduction program, and other states are now following suit. South Carolina has passed an ambitious plan that will increase its tax credit every year from now until 2023, and by the end it will have increased to 125 percent. That means the state will offer a larger income tax credit than the federal government.
Tax season kicks off in the US at the end of this month and relevant information can be found on the IRS website. For the programs in your individual state, visit your state government’s website.