Murtha Means More

May 16, 2022 - Connecticut 2022-2023 Budget Includes $600 Million in Tax Cuts

By: Marc T. Finer

On May 9, 2022, Governor Ned Lamont signed the 2022-2023 Connecticut budget which includes approximately $600 million in tax relief.  The following are some of the highlights of this tax relief:

  • The 25-cents-per-gallon retail fuel tax that was previously suspended from April 1 – June 30, 2022 will continue to be suspended through November 2022.
  • A new one year $250-per-child credit against the Connecticut personal income tax will be available for single filers earning less than $100,000 and married filers earning less than $200,000.  The maximum credit is $750 (up to three children).
  • The local property tax credit against the personal income tax is increased from $200 to $300.  In addition, the availability of the credit has been expanded to include all single filers and married filers with annual income of no more than $109,500 and $130,500, respectively. Prior to this expansion, the credit was available only to individuals over age 65 and individuals with at least one dependent.
  • The cap on municipal taxes on passenger vehicles has been reduced from 45 mills to 32.46 mills.  The municipalities affected by this change will be reimbursed for the lost revenue.
  • Connecticut’s earned income tax credit is increased from 30.5% to 41.5% of the federal credit starting in 2023.
  • Pension and annuity income is completely exempt from Connecticut personal income tax starting in the year 2022 (rather than 2025) for single filers with annual income of less than $75,000 and married filers with annual income of less than $100,000.
  • A personal income tax exemption for distributions from individual retirement accounts (other than Roth individual retirement accounts) will be phased in at 25% per year starting in the year 2023. Like the pension and annuity income exemption, the income limits for this exemption are $75,000/$100,000.
  • The 6% admissions tax on movie theater tickets is eliminated.

If you have any questions regarding the Connecticut budget or how it may impact your business, please contact Marc T. Finer, Tax Partner, at 860-240-6096 or mfiner@murthalaw.com.

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