HARTFORD — Gov. Ned Lamont and advocates touted the sharp increase in the earned income tax credit Wednesday that will put more money into needy families’ pockets.
Using federal money, Lamont retroactively changed the credit for the 2021 calendar year for more than 200,000 low-income households. The average family in the program will receive an additional $375 to bring their state total to as much as $1,000 for the year, depending on their income, officials said.
The credit was increased to 41.5% of the federal credit, which is the highest in Connecticut history by far. Advocates, though, said that other states also have generous programs, including 40% in New Jersey. By 2023, the rate in South Carolina is expected to jump sharply to 125%, officials said.
In Connecticut, the number has changed multiple times through the years, depending on the state’s budget fortunes and decisions by the legislature. The credit has gone from 23% to 30.5% and now to 41.5%.
Lamont said the program is important for working families with earned income.
“It says we value the work you do,’’ Lamont said. “Work should pay.’’
The money is needed for daily expenses, advocates said, citing U.S. Census statistics that 33% of renters with children in Connecticut were not caught up on their rent.
Both Lamont and Republicans have been advocating for tax cuts this year at a time when the state budget surplus has surged beyond $900 million during the current fiscal year. A record-breaking streak on Wall Street has poured hundreds of millions of dollars into state coffers in capital gains taxes that are traditionally paid quarterly through the state income tax.
“Connecticut faces significant challenges, and today’s news conference won’t help Main Street businesses fill the glut of job openings, nor will it provide lasting respite from the array of taxes and fees that constrict opportunity and growth,’’ House Republican leader Vincent Candelora said Thursday. “The governor, backed by federal aid, continues to pursue headlines rather than the transformative change needed to stabilize our state’s future.”
For years, Connecticut had no state credit because it was blocked in the state legislature and had been opposed by Republican governors John G. Rowland and M. Jodi Rell. The measure was finally approved for the first time under then-Gov. Dannel P. Malloy in 2011.
Lamont will use $75 million in federal money to pay for the earned credit, and more than 200,000 mostly low-income Connecticut households would receive an average of about $377 under the plan.
To be eligible, married couples with no children can earn up to $27,380 per year. Couples with two children can earn as much as $53,865 and those with three or more qualifying children can earn as much as $57,000 per year.
“We have got to get Connecticut kids out of poverty,’’ Scanlon said. “This change that the governor made will do that. … We’ve done a great thing, but we’ve done the moral thing.’’
Sen. John Fonfara of Hartford, who co-chairs the finance committee with Scanlon, said he believes his Hartford-based district has more beneficiaries of the credit than any other district.
“These dollars will make a significant difference,’’ Fonfara said Wednesday. “This is real dollars in folks’ pockets. … The reality is a lot of these families were struggling before the pandemic’’ and are still struggling.
Senate President Pro Tem Martin Looney of New Haven, a longtime supporter of the credit, said the money will help families who are “living in fear and living in anguish every single day to pay their bills.’’