Several Tax Cuts Pitched By Lamont: Here's What You Need To Know About Each One

CONNECTICUT — Gov. Ned Lamont has released his administration's first legislative proposals for the 2022 regular session, a series of tax cuts he says would provide approximately $336 million in relief for Connecticut residents.

The tax break recommendations come as the state finds itself awash in federal money injected from the American Rescue Plan Act of 2021. Connecticut is currently projecting an operating surplus of $1.48 billion.

Property tax relief was a priority in the crafting of the proposal, according to Melissa McCaw, the secretary of the Office of Policy and Management, and the state's budget tsar.

In addition to restoring the property tax credit to full eligibility beginning in income year 2022, Lamont is proposing to increase the credit from its current rate of $200 to a maximum of $300 per filer. Increasing the property tax credit by that amount will have an estimated fiscal impact to the state of $70 million, according to OPM.

Under current state law, the property tax credit is limited to those over the age of 65 or those with dependents.

Prioritizing earned income tax credit would incentivize people to get back to work, the governor said.

Lamont is also proposing to accelerate by three years – from 2025 to 2022 – the planned phase-in of the pensions and annuities exemption under the state income tax.

Under current state law, single filers with an adjusted gross income less than $75,000 and joint filers with less than $100,000 qualify for a 56 percent exemption for income year 2022.

The governor said he hopes to retain more Connecticut college students after their graduation. He is proposing an expansion of the student loan tax credit program which currently gives employers a 50 percent tax credit on up to $5,250 in payments toward an employee’s student loan. If approved by the state legislature, the new program would leverage business expenditures alongside the state tax credit to expand eligibility to all loans issued by the Connecticut Higher Education Supplemental Loan Authority. The change would be retroactive to Jan. 1, 2022.

Finally, Lamont is asking the legislature to approve a law that will lower the mill rate cap on motor vehicle property taxes from 45 mills to 29 mills and reimburse local governments for the resulting revenue impact. A 29-mill cap on all motor vehicles will provide property tax relief for over 1.7 million vehicles in 103 towns and cities, or 77 percent of vehicles in the state, according to the Governor's Office.

"It's just insane the way it's set up right now, Lamont said. "You can have a Honda in Hartford, and you are paying higher property taxes on it than a Hummer in Hartland or Harwinton."

Republican Bob Stefanowski, who is gunning for Lamont's job, said on Twitter that the governor's budget priorities were misplaced: "We can do something right now to help people where they’re hurting most: cut the sales tax, eliminate Ned Lamont’s tax on food and restaurants, and make gas more affordable," Stefanowski posted.

The tax cut proposals made Wednesday "don’t even begin to scratch the surface of lowering the burden of affordability on Connecticut’s families, and small businesses," according to Stefanowski.

In a statement released Wednesday, House Republican Leader Vincent Candelora was also critical of Lamont's proposal:

"The governor today promised residents relief from the car tax only two weeks after his budget office told cities and towns it would be unable to provide the extra money they’re supposed to receive through the Municipal Revenue Sharing Account—and this is at a time when the state is seeing record revenue collection. With that in mind, I can’t help but feel as though the 'relief' package crafted by the governor would point us toward territory that municipal leaders and residents have unfortunately grown accustomed to over the last decade: they’re promised the moon, only to see concepts yanked back entirely or retooled so much that they’re barely recognizable. I hope I’m wrong about that this time around, but the fact that his proposal fails to restore the homeowner’s property tax credit to its highest level is a signal that Governor Lamont continues to have challenges following through on fixing issues that residents care about—in this case, affordability."