by John Darer® CLU ChFC MSSC RSP CLTC
Connecticut Budget bill (S.B. 1239), signed May 4, 2011 by Connecticut Governor Dan Malloy, will increase CT personal income tax rates retroactive to January 1, 2011.
The new marginal income tax rates apply for those with taxable incomes of more than $100,000 for joint filers; $50,000 for single filers and married filing separately; and $80,000 for heads of households. A legislative analysis of the budget, states S.B. 1239 does so by:
- increasing the number of tax brackets from three to six;
- splitting the existing 5 percent bracket into four brackets and adding three higher marginal tax rates to that taxable income;
- increasing the top marginal income tax rate to 6.7 percent from 6.5 percent;
- and reducing the taxable income for the 6.7 percent rate bracket by half
The measure also phases out the lowest (3 percent) income tax bracket starting with Connecticut adjusted gross incomes of more than $100,500 for joint filers; $56,500 for singles; $78,500 for heads of household; and $50,250 for married couples filing separately. The legislative analysis said it does so by subjecting increasingly less taxable income to the 3 percent income tax rate as Connecticut adjusted gross income increases and moving the phased-out taxable income to the 5 percent bracket.
Marginal increases in state income taxes increase the intrinsic value of a structured settlement, structured attorney fee or non qualified assignment (taxable damage structured settlements) for Connecticut plaintiffs, claimants and plaintiff lawyers. Under current Federal tax law structured settlement payments that are for payment of damages for physical injury or physical sickness, or workers compensation, are excluded from gross income under Section 104(a) of the Internal Revenue Code*. There is also no state income tax for such payments. Structured attorney fees, employment structured settlements and other forms of non qualified structured settlements and assignments, offer tax deferral options.
For more details, contact Connecticut settlement planning expert John Darer CLU ChFC MSSC CeFT RSP at 203-325-8640
* Since 2016, Damages for wrongful imprisonment are also income tax free per IRC Section 139F. Wrongful imprisonment damages can be structured