This bill modifies Connecticut's personal income tax rules by updating the list of items that can be subtracted from gross income when calculating taxable income. It directly affects Connecticut residents filing state income tax returns by clarifying and adjusting various deductions related to federal tax treatment. Key provisions include maintaining existing deductions for certain federal tax-exempt income, interest on state bonds, and Social Security benefits, while also specifying how to handle amortizable bond premiums on bonds whose interest is taxable under state law but exempt from federal tax. The changes take effect for taxable years beginning on or after January 1, 2027, and primarily align state tax calculations with corresponding federal tax rules.
This bill establishes a new payroll tax program effective January 1, 2027, that allows certain state employees to voluntarily reduce their taxable wages in exchange for a state tax credit. Under the program, eligible employees earning more than $50,000 annually (or $80,000 for heads of household) can elect to participate, which would lower their gross pay but provide them with a credit against their state income tax liability. Employers of participating employees would pay a higher payroll tax rate that increases with the employee's income level, ranging from 5% to 10.5% depending on earnings brackets. The bill defines covered employees as those subject to state wage withholding and includes provisions for union members who can elect participation if their collective bargaining agreement allows it. The program is designed to improve state revenue collection efficiency while giving employees a choice to participate in the tax structure.
This bill updates Connecticut's personal income tax thresholds and exemption amounts to reflect inflation and economic changes, directly affecting state residents who file individual income tax returns. The key mechanism involves adjusting the income levels at which different tax rates apply based on filing status, such as single filers, heads of households, married couples filing jointly, and trusts or estates. By modifying these specific income brackets, the legislation ensures that the tax brackets remain relevant over time without requiring constant legislative intervention. The changes take effect on October 1, 2026, and apply to taxable years beginning on or after that date.
HB 5018 establishes a personal income tax deduction for taxpayers who receive payments from an insurance company to cancel or buy out a long-term care insurance policy. It specifically allows a deduction for the portion of that payment that is already included in federal taxable income. This bill directly affects residents who terminate long-term care insurance policies and receive cash settlements. The key mechanism is aligning state tax treatment with federal rules for these specific insurance-related payments, reducing the state tax burden on that income. The bill does not create new benefits but adjusts tax filing for existing federal taxable events.
HB 5022 eliminates income limits that previously restricted who could claim tax deductions for Social Security benefits, pension or annuity income, and certain retirement account withdrawals. This change directly affects retirees and older adults whose income from these sources would now qualify for the deduction regardless of their total earnings. The bill modifies tax code section 12-701 to remove these qualifying thresholds, simplifying the deduction process. As a result, more individuals receiving these income types will benefit from reduced taxable income under the state's personal income tax system.
SB 78 eliminates income limits that previously restricted who could deduct Social Security benefits from their personal income tax. It directly affects taxpayers receiving Social Security benefits who currently face income thresholds preventing the full deduction. The bill amends section 12-701 of the general statutes to remove these qualifying income thresholds, allowing all eligible Social Security benefit recipients to deduct their benefits regardless of their total income level. This change simplifies the tax deduction process for affected taxpayers without altering the deduction amount itself.
HB 5114 would create a refundable tax credit for renters in the state who pay personal income tax. It allows eligible renters to claim a credit equal to a portion of their rent payments for a primary residence, based on the property tax assessed on that rental property. This credit directly reduces the renter's tax liability and, because it's refundable, could provide a cash refund even if the renter owes no tax. The bill affects renters with primary residences in the state who pay income tax, targeting those whose rent payments correlate with the property tax burden on their landlord's property.
HB 5117 would impose an additional 4% tax on personal income exceeding $1 million annually, directly affecting high earners in that bracket. The revenue generated must be dedicated to specific public services, including free school meals, school construction, higher education funding, childcare support, higher wages for childcare workers, baby supplies, and repairs for roads, bridges, public transit, and free transit access. This bill creates a new tax category for top earners to fund targeted education, childcare, and infrastructure improvements without altering existing tax rates for lower-income individuals.
HB 5097 eliminates income limits that previously restricted eligibility for tax deductions on Social Security benefits, pensions, annuities, and certain retirement account withdrawals. This change directly affects retirees and senior citizens who receive these income types, allowing them to claim the deduction regardless of their total income level. The bill amends Section 12-701 of the tax code to remove the qualifying income thresholds, simplifying the deduction process. It does not change the deduction amount but expands who qualifies for it.
SB 97 creates a personal income tax credit equal to 25% of the value of food donated by taxpayers during a taxable year. This credit directly affects individuals and businesses that donate food to eligible recipients (such as charities or food banks). The key mechanism is a dollar-for-dollar reduction in tax liability based on the donated food's value, calculated annually. The bill aims to incentivize food donations by making them financially beneficial for donors without altering existing tax rates or creating new requirements for recipients.
