Connecticut lawmakers approved a $51.1 billion budget that cuts personal income-tax rates for the first time in almost 30 years, while increasing spending on education and housing.
"We are delivering the largest cut to Connecticut's income tax rates in state history," said Governor Ned Lamont in a press release Tuesday.
The tax cut will benefit 1 million filers, or almost 60% of all filers, according to Lamont in a press statement prior to the budget passing.
The Democrat-controlled state Senate approved the two-year budget Tuesday following the state's Democrat-led House of Representatives vote to pass the budget in the early morning.
The income-tax cuts, capped at $150,000 for single filers and $300,000 for joint filers, reduces the rate for families to 2% on their first $20,000 in income and to 4.5% on income of as much as $100,000, down from 3% and 5%, respectively.
For single filers the new rates apply to the first $10,000 and $50,000 in income, respectively. The rate cuts along with an increase in the earned income tax credit and lower taxes on pensions and annuities, will cost the state about $460 million.
Surging stocks and Wall Street profits last year have boosted capital-gains-tax revenue, while sales-tax collections are also rising. In 2017, lawmakers passed a bill requiring the state, which is heavily reliant on Wall Street for income-tax revenue, to fill its rainy-day fund with any capital-gains and bonus taxes that exceed a certain threshold.
