A state tax credit for Hoosiers would increase thanks to legislation that the Indiana House on Monday unanimously adopted.
The law, HB 1290, does more than just raise Indiana earned income tax credit by a few hundred dollars in some situations. Additionally, it more closely aligns the federal and state credits.
As a result, married couples who file their taxes jointly will be subject to a higher eligibility income cap. Additionally, a larger credit is now available to taxpayers who have three or more dependents.
Additional Budget Proposal
Ned Lamont, the governor of Connecticut, also declared on Monday that he planned to raise the Earned Income Tax Credit from 30% to 40%. He added that the additional $44.6 million in state tax credits included in this budget plan will benefit about 211,675 low-income households.
The following are the federal income eligibility requirements for 2022:
- $16,480 for individuals and $22,610 for married filing jointly if no dependents
- One dependent: $43,492 for single filers and $49,622 for joint filers
- Two dependents: $49,000 for single filers and $55,529 for joint filers
- Three dependents: $53,057 for single filers and $59,187 for joint filers
Additionally, according to the Governor’s office, each household’s credit amount is based on its financial need and the size of its federal credit.
Furthermore, if the Earned Income Tax Credit is increased to 40%, each household in Connecticut will receive a state tax credit of up to $2, 465.
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What Is Earned Income Tax Credit (EITC)?
The EITC was created in 1975 to offer working poor people who had to pay Social Security taxes temporary tax relief as the price of food and energy rose. Under the Revenue Act of 1978, it was made a permanent tax relief three years later. In order to combat poverty and motivate those with low incomes to obtain employment, the EITC has grown and undergone modifications over time.
You must adhere to specific requirements in order to be eligible for the EITC. For starters, you’ll need to have earned money, or taxable income, from running a small business, farming, or working for a firm. If you don’t have a Social Security number or are married and filing a separate tax return, you cannot receive the tax credit.
If your adjusted gross income exceeds a particular limit and your investment income totals more than $10,300, you are also ineligible for the EITC for your 2021 taxes.
You are ineligible to file for the tax credit if you are married but filing separately for the 2021 tax year. Based on your filing status and the number of eligible children you’re claiming, the chart below provides a more detailed breakdown of the EITC income constraints.
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