Cheeseman: Tax Relief Coming for CT Families and Seniors

HARTFORD- State Rep. Holly Cheeseman (R-37) attended a press conference with legislative leaders and Governor Ned Lamont announcing that three significant tax relief measures will take effect in Connecticut at the start of 2024, and among them are the largest income tax reduction ever enacted in state history, an increase in a tax credit targeting the lowest-income workers, and an expansion of exemptions on certain pension and annuity earnings to benefit seniors.

They are the result of the fiscal year 2024-2025 state budget that the Connecticut General Assembly approved and Governor Lamont signed into law this summer (Public Act 23-204).

“What a great way to start the new year, historic tax relief! This relief will help many Connecticut families that live paycheck to paycheck,” said Rep. Cheeseman. “My hope is the fiscal guardrails that helped us provide this tax relief are adhered to and extended for future years.”

One million tax filers to benefit from income tax cuts

Beginning on January 1, 2024, a reduction in Connecticut’s income tax rates will take effect, making this the first time that rates have been reduced in the state since the mid-1990s. It is also the largest income tax cut enacted in state history.

Connecticut has a progressive income tax rate structure, meaning that the tax rate increases with income at varying rates as income grows in each bracket. The changes enacted in 2024 will see a decrease in the two lowest rates:

• The 3% rate on the first $10,000 earned by single filers and the first $20,000 by joint filers will drop to 2%.
• The 5% rate on the next $40,000 earned by single filers and the next $80,000 by joint filers will drop to 4.5%.

The relief is targeted toward middle-class tax filers and is capped at $150,000 for single filers and $300,000 for joint filers.

Expanding certain deductions for IRA distributions and pension and annuity earnings for seniors

Also effective in 2024 is an expansion of the state’s existing deductions for certain IRA distributions and pension and annuity earnings to benefit seniors. Specifically, the state budget eliminates the retirement income tax cliff by adding a phase-out for allowable pension and annuity and IRA distribution deductions against the personal income tax.

Approximately 200,000 filers benefit from the currently enacted retiree exemption limits. It is estimated that with these changes, an additional 100,000 filers could benefit from the elimination of the retirement cliff via the exemption phase-out.