Bill review: Increase Top Marginal Income Tax Rate (CT)

[DTrim99]

Bill Review: Increase Top Marginal Income Tax Rate

Reform ID: ct-hb5133 | State: CT
Bill text: https://www.cga.ct.gov/asp/CGABillStatus/cgabillstatus.asp?selBillType=Bill&bill_num=HB5133
Description: Increases Connecticut's top marginal income tax rate from 6.99% to 7.99% for high earners (single filers over $500,000, joint filers over $1,000,000).

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Parameter	Current	Proposed
Top Marginal Rate (Single)	gov.states.ct.tax.income.rates.single.brackets[6].rate	6.99%	7.99%
Top Marginal Rate (Joint)	gov.states.ct.tax.income.rates.joint.brackets[6].rate	6.99%	7.99%
Top Marginal Rate (HoH)	gov.states.ct.tax.income.rates.head_of_household.brackets[6].rate	6.99%	7.99%
Top Marginal Rate (MFS)	gov.states.ct.tax.income.rates.separate.brackets[6].rate	6.99%	7.99%
Top Marginal Rate (Surviving Spouse)	gov.states.ct.tax.income.rates.surviving_spouse.brackets[6].rate	6.99%	7.99%

Validation

External estimates

Source	Estimate	Period	Link
No official fiscal note	—	—	—

Back-of-envelope check

Rate change: 6.99% → 7.99% = 1pp increase
Estimated top bracket share: ~40-45% of CT income tax base
CT income tax revenue: $13.2B → 0.01 × 40% × $13.2B = **$50-60M**
(Initial rough estimate significantly underestimated actual taxable income in top bracket)

PE vs External comparison

Source	Estimate	vs PE	Difference
PE (PolicyEngine)	+$815M	—	—
Back-of-envelope	~$50-60M	~1,400%	Large discrepancy

Verdict: PE estimate is significantly higher than back-of-envelope. This is because the back-of-envelope underestimated the concentration of taxable income in the top bracket. PE's microsimulation uses actual income distribution from CPS microdata, which captures the substantial taxable income held by high earners in Connecticut.

Parameter changes

Parameter	Period	Value	Bill Reference
gov.states.ct.tax.income.rates.single.brackets[6].rate	2026-01-01	0.0799 (7.99%)	Section 1
gov.states.ct.tax.income.rates.joint.brackets[6].rate	2026-01-01	0.0799 (7.99%)	Section 1
gov.states.ct.tax.income.rates.head_of_household.brackets[6].rate	2026-01-01	0.0799 (7.99%)	Section 1
gov.states.ct.tax.income.rates.separate.brackets[6].rate	2026-01-01	0.0799 (7.99%)	Section 1
gov.states.ct.tax.income.rates.surviving_spouse.brackets[6].rate	2026-01-01	0.0799 (7.99%)	Section 1

Key results

Metric	Value
Revenue impact	+$814,614,227
Poverty rate	20.07% → 20.07% (0% change)
Child poverty rate	16.63% → 16.63% (0% change)
Winners	0.0%
Losers	4.0%

Decile impact

Decile	Relative Change	Avg Impact
1	0%	$0
2	0%	$0
3	0%	$0
4	0%	$0
5	0%	$0
6	0%	$0
7	0%	$0
8	0%	$0
9	0%	$0
10	-0.78%	-$7,738

Only the top decile (decile 10) is affected. Within decile 10, ~40% of households would see a tax increase.

District impacts

District	Avg Impact	Winners	Losers	Poverty Change
CT-1	-$325	0%	3%	0%
CT-2	-$363	0%	3%	0%
CT-3	-$347	0%	3%	0%
CT-4	-$1,731	0%	5%	0%
CT-5	-$398	0%	3%	0%

Note: CT-4 (Fairfield County area) shows significantly higher impact due to concentration of high-income households.

Reform parameters JSON

{
  "gov.states.ct.tax.income.rates.single.brackets[6].rate": {
    "2026-01-01": 0.0799
  },
  "gov.states.ct.tax.income.rates.joint.brackets[6].rate": {
    "2026-01-01": 0.0799
  },
  "gov.states.ct.tax.income.rates.head_of_household.brackets[6].rate": {
    "2026-01-01": 0.0799
  },
  "gov.states.ct.tax.income.rates.separate.brackets[6].rate": {
    "2026-01-01": 0.0799
  },
  "gov.states.ct.tax.income.rates.surviving_spouse.brackets[6].rate": {
    "2026-01-01": 0.0799
  }
}

Versions

• PolicyEngine US: 1.579.0
• Dataset: policyengine-us-data v1.48.0
• Computed: 2026-02-23

[PavelMakarchuk]

@DTrim99 can you find more comparable estimates in CT and run an apples to apples comaprison