HARTFORD – Senate President Pro Tempore Martin M. Looney today led bipartisan Senate passage of a two-year state budget that includes a historic working class and middle class personal income tax cut while simultaneously providing towns more money for local schools as well as funding much-needed state social service programs.
The $51.1 billion biennial state budget for July 2023-June 2025 passed the Senate today. The new state budget includes a total of $612 million in personal income and pension tax cuts while providing $300 million more in state aid to local school districts and hundreds of millions more for nonprofits to pay their employees higher wages.
“This budget reflects our core Democratic value that government must invest in people for our state to prosper,” said Senator Looney. “Hundreds of millions more in state funding for our neediest, our non-profit service providers, our local schools, our higher education system, and our cities and towns demonstrates the Democratic commitment to assisting the people of Connecticut. We are able to accomplish all of these investments while also targeting tax cuts to the working class, the middle class, and retirees.”
The budget passed today includes the first personal income tax cut in Connecticut in nearly 30 years, and it’s focused on Connecticut’s broad middle class – those earning up to $100,000 a year – although all taxpayers will benefit to some extent.
The current 3% income tax rate on the first $10,000 earned by single filers and the $20,000 earned by couples will drop to 2%, and the 5% income tax rate imposed on the next $40,000 earned by singles and $80,000 earned by couples will drop to 4.5%. The income tax cuts are expected to save middle-class households $300 to $500 per year.
The new budget also expands the income tax credit for Connecticut’s working poor from 30.5% of the federal Earned Income Tax Credit to 40%, helping approximately 200,000 Connecticut households.
The new budget also expands the income tax exemption for some pension and annuity earnings, expanding it to single filers making $75,000 – $100,000 and couples making $100,000 -$150,000.
On the spending side, local school districts are the winners, with many towns getting more state aid and no city or town being cut. The new budget provides over $232 million more in Education Cost Sharing (ECS) grants for Connecticut cities and towns, thereby helping to keep local property tax rates low. There’s also $16 million to continue expanded free school meals for children.
Private provider organizations that contract for state-sponsored social services (like aging, disability, corrections, housing, mental health and addiction, early childhood, etc.) will receive $87 million more in each year of the budget, providing 4% and 5.4% cost of living wage increases for their employees.
Other budget highlights include: $3 million to expand HUSKY health care for children up to age 15, regardless of their immigration status; $6 million to expand GPS monitoring of domestic violence offenders across the state; $5.4 million to implement early voting initiatives; Restores 100% of service on the New Haven train line and branch lines next year