The State of Connecticut has made the following tax law changes for tax year 2021:
- Property Tax Credit- The Connecticut Property Tax Credit for tax year 2020 has been extended to tax years 2021 and 2022. The maximum Property Tax Credit is $200 and to qualify, the primary taxpayer or spouse must be 65 years or older by the end of the tax year, or have claimed at least one dependent on their federal return.
- Earned Income Tax Credit Increase- The earned income tax credit for Connecticut residents has been increased to 30.5% of the federal earned income credit
- Subtraction Modification for Certain IRA Distributions- "Beginning with taxable year 2023, a subtraction modification for distributions from individual retirement accounts (IRAs), other than Roth IRAs, will be phased in over a four year period. The subtraction modification may be claimed by taxpayers whose federal adjusted gross income is less than $75,000 (for single, married filing separately, and head of household) or $100,000 (for married filing jointly).
The subtraction modification will be allowed to the extent the IRA distributions are included in federal adjusted gross income and will be phased in as follows:
Taxable Year Subtraction Equal to:
2023 25% of IRA distribution
2024 50% of IRA distribution
2025 75% of IRA distribution
2026 and after 100% of IRA distribution"
- Connecticut Teachers’ Retirement System Income- Beginning in the 2021 tax year, retired teachers are now allowed to claim either the teachers’ pension subtraction or the pension and annuity subtraction on their Connecticut Teachers’ Retirement System income.
You can read more about the changes to Connecticut Tax Law here.