HB 5113 Connecticut House · 2026 Regular Session

AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION FOR THE AMOUNT OF CANCELLED DEBT AND DEBT RELIEF RECEIVED BY A TAXPAYER FOR STUDENT LOANS, MEDICAL DEBT AND CREDIT CARD DEBT.

HB 5113 exempts Connecticut taxpayers from state income tax on forgiven amounts for student loans, medical debt, and credit card debt. The bill adds a new deduction to Connecticut's tax code, allowing taxpayers to exclude debt relief that would otherwise be taxable under federal law. This directly affects residents who receive debt settlement or relief for these specific debt types. The provision takes effect January 1, 2027, and aligns Connecticut tax treatment with federal rules for these debt forgiveness scenarios.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 10, 2026 Last action Apr 16, 2026

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What changed between versions

Proposed Bill → Committee Bill · 4 edits

MODERATE

The bill was amended to shift from a total exemption of debt relief from state income tax to a new system that allows taxpayers to deduct specific amounts of cancelled debt from their taxable income. This change aligns the state treatment with federal tax rules, ensuring that debt relief is only excluded from state taxes if it is also excluded from federal taxes. Additionally, the Committee Bill expanded the list of allowable deductions to include various other items such as tax refunds, railroad retirement benefits, and specific depreciation allowances.

Scope change

The bill's scope changed from a narrow exemption for specific debt types to a broader set of deductions that mirror federal adjusted gross income calculations.

SCOPE

Replaced a direct exemption of debt relief with a deduction mechanism for cancelled debt, medical debt, and credit card debt.

Added a new list of deductible items including federal tax refunds, interest on state-municipal bonds, and specific depreciation allowances.

ELIGIBILITY

Included provisions for deducting Social Security benefits based on federal income thresholds and filing status.

TIMELINE

Updated the effective date to January 1, 2027, and specified applicability to taxable years commencing on or after that date.

Floor votes

How they voted

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Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 30, 2026

Lower · Passed

Joint Favorable

lower

Mar 3, 2026

Committee

REF. TO JOINT COMM. ON Finance, Revenue and Bonding

lower

Mar 2, 2026

Lower · Passed

DRAFTED BY COMMITTEE

lower

Feb 10, 2026

Committee

REF. TO JOINT COMM. ON Finance, Revenue and Bonding

lower

2 primary · 0 co-sponsors