Despite COVID-19 cases surging all over the country, there is no fourth stimulus check in sight, and the child tax credit comes to an end this month. However, in Connecticut, the state legislature has passed an expansion of the earned income tax credit, which will benefit about 200,000 residents. According to a report by BGR, this signifies a growing trend that future pandemic relief will be passed at the state level.
Connecticut Gov. Ned Lamond announced last week that he has directed the state’s Congressional delegation to retroactively enhance Connecticut’s 2020 earned income tax credit. According to a report by The Hartford Courant it has been raised from 23% of the federal credit to 41.5%, meaning that qualifying taxpayers will get an additional payout for their 2020 taxes when they file a tax return this year. The credit could put anywhere from $375 to $1,000 into tax refunds in the spring.
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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, refer to the state’s website here. Lamont touted this tax credit as a lifeline for working families in Connecticut, saying: “It says we value the work you do. Work should pay.” He and his supporters in the state government say that this money will go mostly to renters with children, citing the U.S. Census, and will be needed to catch up on bills and for daily expenses.
The Connecticut budget surplus rose over $900 million in the last fiscal year, so Lamont and Connecticut Republicans have both been calling for tax cuts. Of course, deciding how to make those cuts is a contentious issue, and a tax credit like this one is seen as a holdover measure. However, many pundits have pointed out similar tax credits available in other states – so much so that some believe state lawmakers are now “competing” to create the most favorable living situation.
Nearby New Jersey offers a similar 40% tax credit program, and other states are now following suit. South Carolina has adopted an ambitious plan that will have raise its tax credit every year from now through 2023, and by the end, it will have gone up to 125%. That means 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 U.S., and relevant information can be accessed on the IRS’ website. For the programs in your individual state, visit your state government’s website.
