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SB 39

AN ACT REQUIRING THE INDEXING OF INCOME THRESHOLDS FOR THE PERSONAL INCOME TAX.

2026 Regular Session Introduced by Ryan Fazio

Connecticut bill automatically adjusts income tax brackets annually for inflation, preventing bracket creep but reducing state revenue growth and legislative control over tax policy.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#incometax(state)
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WeVote Research Nonpartisan
Bill Summary · SB 39

Legislative bill overview

SB 39 would automatically adjust Connecticut's personal income tax brackets and related thresholds annually based on inflation, rather than requiring legislative action each time adjustments are needed. This indexing mechanism ties tax parameters to a recognized inflation index, typically the Consumer Price Index (CPI), ensuring they rise with the cost of living.

Why is this important

Without indexing, tax brackets remain static while inflation gradually pushes more taxpayers into higher brackets (called "bracket creep"), effectively increasing tax burdens without explicit legislative votes. Indexing prevents this hidden tax increase and provides predictability for taxpayers and state revenue projections, though it also means less legislative oversight of tax policy year-to-year.

Potential points of contention

  • Revenue impact: Automatic indexing reduces state tax revenue growth relative to current policy, requiring either spending cuts or alternative funding sources
  • Legislative control: Removes lawmakers' ability to deliberately adjust tax policy annually, limiting their fiscal policy tools and responsiveness to economic conditions
  • Index selection: Disputes could arise over which inflation measure best reflects Connecticut residents' actual experience, and whether indexing captures regional cost-of-living differences
  • Cumulative effect: Over decades, compounding adjustments could significantly narrow the tax base and alter the distribution of tax burdens across income levels

Compiled from official sources — confirm details with the bill’s official record.

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