The State of Connecticut has made the following tax law changes for tax year 2025:
Youth Organization Tax Credit
Only cash donations to youth organizations located in Connecticut now qualify.
Workforce Housing Opportunity Development Credit
Credit increased to 50% of qualifying cash contributions.
Effective: Income/tax years starting January 1, 2025.
Expanded Earned Income Tax Credit (EITC)
Taxpayers with at least one qualifying child get an additional $250, on top of the standard EITC.
Effective: Tax years beginning January 1, 2025.
Family Child Care Homeowner Credit
Homeowners of licensed family childcare homes qualify for a $500 credit per home.
Excess credit is refundable.
Effective: Tax years starting January 1, 2026.
Farm Investment Tax Credit
Eligible farmers receive a 20% credit on expenditures for machinery, equipment, and buildings.
Refundable if it exceeds tax liability.
Effective: Tax years starting January 1, 2026.
Changes to Tax Refund Contribution Options
Removed CHET Baby Scholars Fund as a refund destination, and added the Connecticut Baby Bond Trust option.
Effective: January 1, 2025.
UConn‑Administered Tax Credit Incentive
Taxpayers making qualifying payments to UConn can claim a 50% credit, capped at $500,000 per taxpayer and $5 million total annually.
Unused credits can be carried forward up to 15 years.
Effective: Tax years starting January 1, 2025.
Pension/Annuity Withholding Suspension
Mandatory withholding on lump‑sum distributions is suspended from July 1, 2025 through December 31, 2026, unless the payee requests it.
Convenience‑of‑Employer Rule Challenge Credit
Connecticut residents who challenge and overturn another state’s “convenience‑of‑employer” tax rule get a 60% credit of the Connecticut tax adjustment.
Fallen Hero Fund Expansion
As of July 1, 2025, death‑benefit provisions for fallen police officers are expanded to include EMTs, firefighters, and paramedics.
You can read more about the changes to Connecticut Tax Law here.