August 7, 2002
PROPERTY TAX CREDITS AGAINST THE STATE INCOME TAX
By: Judith Lohman, Chief Analyst
You asked for a history of the property tax credit against the state income tax.
Connecticut gives taxpayers a credit against their state income tax for property taxes they pay on their primary residence or motor vehicle, up to a specified maximum credit. The credit gradually phases out for those with higher incomes. The credit was established in 1995. The maximum credit has been increased several times from an initial $100 to the current $500. The last change occurred in 1999.
PA 95-160 established a credit against the state income tax of up to a $100 for property taxes paid on a primary Connecticut residence or on motor vehicles.
PA 96-139 specified that the property tax credit for joint filers could not exceed $100 of the aggregate property taxes they paid.
PA 97-309 increased the maximum credit to $215 for the 1997 tax year and $275 in subsequent years. It limited the credit to one vehicle for individuals, heads of households, and married people filing separately and to two vehicles for married people filing jointly. It also extended the credit to vehicles leased for more than one year.
The act established a credit phase-out for taxpayers with higher incomes. It reduced the amount of the credit above $100 by 10% for every $10,000 in income above a certain threshold for every filing status except married filing separately. (For this group, the reduction was 10% for every $5,000.) For individual filers, the threshold was a Connecticut adjusted gross income of $52,500; for married people filing separately, $50,250; for heads of households, $78,500; and for joint filers, $100,500.
PA 97-322 increased the maximum credit for 1999 and thereafter to $285.
PA 98-100 increased the maximum credit from $285 to $350 and PA 98-262 specified that, in figuring the credit, any property tax interest, fees, and charges were excluded.
PA 99-173 increased the maximum credit to $425 for 1999 and $500 for 2000 and subsequent years.