Members of the legislature’s Tax Equity Caucus have proposed increasing the state’s top marginal income tax rate from 6.99% to 7.99%, creating a capital gains surcharge on high-income earners and potentially adding a 4% surtax on income above $1 million, modeled after a Massachusetts measure approved in 2022.

Supporters argue the changes would make Connecticut’s tax system more equitable and help fund priorities such as a refundable child tax credit, education and infrastructure.

Gov. Ned Lamont has resisted broad tax increases, saying the state should focus on expanding its tax base by attracting and retaining residents and businesses. Business groups, including the Connecticut Business & Industry Association and the National Federation of Independent Business, have warned that higher income tax rates could weaken the state’s competitive position and discourage investment.