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General Assembly Committee Bill No. 6891
January Session, 2019
LCO No. 5400
Referred to Committee on HIGHER EDUCATION AND
EMPLOYMENT ADVANCEMENT
Introduced by:
(HED)
AN ACT CONCERNING A DEDUCTION FROM THE P ERSONAL
INCOME TAX FOR STUDE NT LOAN INTEREST.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Subparagraph (B) of subdivision (20) of subsection (a) of 1
section 12-701 of the general statutes is repealed and the following is 2
substituted in lieu thereof (Effective July 1, 2019, and applicable to taxable 3
years commencing on or after January 1, 2020): 4
(B) There shall be subtracted therefrom: 5
(i) To the extent properly includable in gross income for federal 6
income tax purposes, any income with respect to which taxation by 7
any state is prohibited by federal law; 8
(ii) To the extent allowable under section 12-718, exempt dividends 9
paid by a regulated investment company; 10
(iii) To the extent properly includable in gross income for federal 11
income tax purposes, the amount of any refund or credit for 12
overpayment of income taxes imposed by this state, or any other state 13
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of the United States or a political subdivision thereof, or the District of 14
Columbia; 15
(iv) To the extent properly includable in gross income for federal 16
income tax purposes and not otherwise subtracted from federal 17
adjusted gross income pursuant to clause (x) of this subparagraph in 18
computing Connecticut adjusted gross income, any tier 1 railroad 19
retirement benefits; 20
(v) To the extent any additional allowance for depreciation under 21
Section 168(k) of the Internal Revenue Code for property placed in 22
service after September 27, 2017, was added to federal adjusted gross 23
income pursuant to subparagraph (A)(ix) of this subdivision in 24
computing Connecticut adjusted gross income, twenty-five per cent of 25
such additional allowance for depreciation in each of the four 26
succeeding taxable years; 27
(vi) To the extent properly includable in gross income for federal 28
income tax purposes, any interest income from obligations issued by or 29
on behalf of the state of Connecticut, any political subdivision thereof, 30
or public instrumentality, state or local authority, district or similar 31
public entity created under the laws of the state of Connecticut; 32
(vii) To the extent properly includable in determining the net gain 33
or loss from the sale or other disposition of capital assets for federal 34
income tax purposes, any gain from the sale or exchange of obligations 35
issued by or on behalf of the state of Connecticut, any political 36
subdivision thereof, or public instrumentality, state or local authority, 37
district or similar public entity created under the laws of the state of 38
Connecticut, in the income year such gain was recognized; 39
(viii) Any interest on indebtedness incurred or continued to 40
purchase or carry obligations or securities the interest on which is 41
subject to tax under this chapter but exempt from federal income tax, 42
to the extent that such interest on indebtedness is not deductible in 43
determining federal adjusted gross income and is attributable to a 44
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trade or business carried on by such individual; 45
(ix) Ordinary and necessary expenses paid or incurred during the 46
taxable year for the production or collection of income which is subject 47
to taxation under this chapter but exempt from federal income tax, or 48
the management, conservation or maintenance of property held for the 49
production of such income, and the amortizable bond premium for the 50
taxable year on any bond the interest on which is subject to tax under 51
this chapter but exempt from federal income tax, to the extent that 52
such expenses and premiums are not deductible in determining federal 53
adjusted gross income and are attributable to a trade or business 54
carried on by such individual; 55
(x) (I) For taxable years commencing prior to January 1, 2019, for a 56
person who files a return under the federal income tax as an 57
unmarried individual whose federal adjusted gross income for such 58
taxable year is less than fifty thousand dollars, or as a married 59
individual filing separately whose federal adjusted gross income for 60
such taxable year is less than fifty thousand dollars, or for a husband 61
and wife who file a return under the federal income tax as married 62
individuals filing jointly whose federal adjusted gross income for such 63
taxable year is less than sixty thousand dollars or a person who files a 64
return under the federal income tax as a head of household whose 65
federal adjusted gross income for such taxable year is less than sixty 66
thousand dollars, an amount equal to the Social Security benefits 67
includable for federal income tax purposes; 68
(II) For taxable years commencing prior to January 1, 2019, for a 69
person who files a return under the federal income tax as an 70
unmarried individual whose federal adjusted gross income for such 71
taxable year is fifty thousand dollars or more, or as a married 72
individual filing separately whose federal adjusted gross income for 73
such taxable year is fifty thousand dollars or more, or for a husband 74
and wife who file a return under the federal income tax as married 75
individuals filing jointly whose federal adjusted gross income from 76
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such taxable year is sixty thousand dollars or more or for a person who 77
files a return under the federal income tax as a head of household 78
whose federal adjusted gross income for such taxable year is sixty 79
thousand dollars or more, an amount equal to the difference between 80
the amount of Social Security benefits includable for federal income tax 81
purposes and the lesser of twenty-five per cent of the Social Security 82
benefits received during the taxable year, or twenty-five per cent of the 83
excess described in Section 86(b)(1) of the Internal Revenue Code; 84
(III) For the taxable year commencing January 1, 2019, and each 85
taxable year thereafter, for a person who files a return under the 86
federal income tax as an unmarried individual whose federal adjusted 87
gross income for such taxable year is less than seventy-five thousand 88
dollars, or as a married individual filing separately whose federal 89
adjusted gross income for such taxable year is less than seventy-five 90
thousand dollars, or for a husband and wife who file a return under 91
the federal income tax as married individuals filing jointly whose 92
federal adjusted gross income for such taxable year is less than one 93
hundred thousand dollars or a person who files a return under the 94
federal income tax as a head of household whose federal adjusted 95
gross income for such taxable year is less than one hundred thousand 96
dollars, an amount equal to the Social Security benefits includable for 97
federal income tax purposes; and 98
(IV) For the taxable year commencing January 1, 2019, and each 99
taxable year thereafter, for a person who files a return under the 100
federal income tax as an unmarried individual whose federal adjusted 101
gross income for such taxable year is seventy-five thousand dollars or 102
more, or as a married individual filing separately whose federal 103
adjusted gross income for such taxable year is seventy-five thousand 104
dollars or more, or for a husband and wife who file a return under the 105
federal income tax as married individuals filing jointly whose federal 106
adjusted gross income from such taxable year is one hundred 107
thousand dollars or more or for a person who files a return under the 108
federal income tax as a head of household whose federal adjusted 109
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gross income for such taxable year is one hundred thousand dollars or 110
more, an amount equal to the difference between the amount of Social 111
Security benefits includable for federal income tax purposes and the 112
lesser of twenty-five per cent of the Social Security benefits received 113
during the taxable year, or twenty-five per cent of the excess described 114
in Section 86(b)(1) of the Internal Revenue Code; 115
(xi) To the extent properly includable in gross income for federal 116
income tax purposes, any amount rebated to a taxpayer pursuant to 117
section 12-746; 118
(xii) To the extent properly includable in the gross income for 119
federal income tax purposes of a designated beneficiary, any 120
distribution to such beneficiary from any qualified state tuition 121
program, as defined in Section 529(b) of the Internal Revenue Code, 122
established and maintained by this state or any official, agency or 123
instrumentality of the state; 124
(xiii) To the extent allowable under section 12-701a, contributions to 125
accounts established pursuant to any qualified state tuition program, 126
as defined in Section 529(b) of the Internal Revenue Code, established 127
and maintained by this state or any official, agency or instrumentality 128
of the state; 129
(xiv) To the extent properly includable in gross income for federal 130
income tax purposes, the amount of any Holocaust victims' settlement 131
payment received in the taxable year by a Holocaust victim; 132
(xv) To the extent properly includable in gross income for federal 133
income tax purposes of an account holder, as defined in section 31-134
51ww, interest earned on funds deposited in the individual 135
development account, as defined in section 31-51ww, of such account 136
holder; 137
(xvi) To the extent properly includable in the gross income for 138
federal income tax purposes of a designated beneficiary, as defined in 139
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section 3-123aa, interest, dividends or capital gains earned on 140
contributions to accounts established for the designated beneficiary 141
pursuant to the Connecticut Homecare Option Program for the Elderly 142
established by sections 3-123aa to 3-123ff, inclusive; 143
(xvii) To the extent properly includable in gross income for federal 144
income tax purposes, any income received from the United States 145
government as retirement pay for a retired member of (I) the Armed 146
Forces of the United States, as defined in Section 101 of Title 10 of the 147
United States Code, or (II) the National Guard, as defined in Section 148
101 of Title 10 of the United States Code; 149
(xviii) To the extent properly includable in gross income for federal 150
income tax purposes for the taxable year, any income from the 151
discharge of indebtedness in connection with any reacquisition, after 152
December 31, 2008, and before January 1, 2011, of an applicable debt 153
instrument or instruments, as those terms are defined in Section 108 of 154
the Internal Revenue Code, as amended by Section 1231 of the 155
American Recovery and Reinvestment Act of 2009, to the extent any 156
such income was added to federal adjusted gross income pursuant to 157
subparagraph (A)(xi) of this subdivision in computing Connecticut 158
adjusted gross income for a preceding taxable year; 159
(xix) To the extent not deductible in determining federal adjusted 160
gross income, the amount of any contribution to a manufacturing 161
reinvestment account established pursuant to section 32-9zz in the 162
taxable year that such contribution is made; 163
(xx) To the extent properly includable in gross income for federal 164
income tax purposes, (I) for the taxable year commencing January 1, 165
2015, ten per cent of the income received from the state teachers' 166
retirement system, (II) for the taxable years commencing January 1, 167
2016, January 1, 2017, and January 1, 2018, twenty-five per cent of the 168
income received from the state teachers' retirement system, and (III) 169
for the taxable year commencing January 1, 2019, and each taxable year 170
thereafter, fifty per cent of the income received from the state teachers' 171
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retirement system or the percentage, if applicable, pursuant to clause 172
(xxi) of this subparagraph; 173
(xxi) To the extent properly includable in gross income for federal 174
income tax purposes, except for retirement benefits under clause (iv) of 175
this subparagraph and retirement pay under clause (xvii) of this 176
subparagraph, for a person who files a return under the federal income 177
tax as an unmarried individual whose federal adjusted gross income 178
for such taxable year is less than seventy-five thousand dollars, or as a 179
married individual filing separately whose federal adjusted gross 180
income for such taxable year is less than seventy-five thousand dollars, 181
or as a head of household whose federal adjusted gross income for 182
such taxable year is less than seventy-five thousand dollars, or for a 183
husband and wife who file a return under the federal income tax as 184
married individuals filing jointly whose federal adjusted gross income 185
for such taxable year is less than one hundred thousand dollars, (I) for 186
the taxable year commencing January 1, 2019, fourteen per cent of any 187
pension or annuity income, (II) for the taxable year commencing 188
January 1, 2020, twenty-eight per cent of any pension or annuity 189
income, (III) for the taxable year commencing January 1, 2021, forty-190
two per cent of any pension or annuity income, (IV) for the taxable 191
year commencing January 1, 2022, fifty-six per cent of any pension or 192
annuity income, (V) for the taxable year commencing January 1, 2023, 193
seventy per cent of any pension or annuity income, (VI) for the taxable 194
year commencing January 1, 2024, eighty-four per cent of any pension 195
or annuity income, and (VII) for the taxable year commencing January 196
1, 2025, and each taxable year thereafter, any pension or annuity 197
income; 198
(xxii) The amount of lost wages and medical, travel and housing 199
expenses, not to exceed ten thousand dollars in the aggregate, incurred 200
by a taxpayer during the taxable year in connection with the donation 201
to another person of an organ for organ transplantation occurring on 202
or after January 1, 2017; 203
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(xxiii) To the extent properly includable in gross income for federal 204
income tax purposes, the amount of any financial assistance received 205
from the Crumbling Foundations Assistance Fund or paid to or on 206
behalf of the owner of a residential building pursuant to sections 8-442 207
and 8-443; [, and] 208
(xxiv) To the extent properly includable in gross income for federal 209
income tax purposes, the amount calculated pursuant to subsection (b) 210
of section 12-704g for income received by a general partner of a 211
venture capital fund, as defined in 17 CFR 275.203(l)-1, as amended 212
from time to time; [and] 213
(xxv) To the extent any portion of a deduction under Section 179 of 214
the Internal Revenue Code was added to federal adjusted gross income 215
pursuant to subparagraph (A)(xiv) of this subdivision in computing 216
Connecticut adjusted gross income, twenty-five per cent of such 217
disallowed portion of the deduction in each of the four succeeding 218
taxable years; and 219
(xxvi) To the extent not deductible in determining federal adjusted 220
gross income, and to the extent allowable under section 2 of this act, 221
the amount of payments made during the taxable year for interest on a 222
student loan. 223
Sec. 2. (NEW) (Effective July 1, 2019, and applicable to taxable years 224
commencing on or after January 1, 2020) (a) For the purposes of this 225
section: 226
(1) "Qualified student loan" means a loan taken out solely to pay 227
qualified education expenses (A) for the taxpayer, the taxpayer's 228
spouse or a person who was a dependent of the taxpayer at the time 229
when the taxpayer took out the loan, (B) paid or incurred within a 230
reasonable period of time before or after the taxpayer took out the 231
loan, (C) from a private or governmental lender, and (D) for education 232
provided during an academic period for an eligible student; 233
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(2) "Qualified education expenses" means the total costs of attending 234
an eligible institution of higher education, including graduate school, 235
and includes amounts paid for the following items: (A) Tuition and 236
fees; (B) room and board, provided the cost of room and board 237
qualifies only to the extent that it is not more than the greater of (i) the 238
allowance for room and board, as determined by the eligible 239
institution of higher education, that was included in the cost of 240
attendance for a particular academic period and living arrangement of 241
the student, or (ii) the actual amount charged if the student is residing 242
in housing owned or operated by the eligible institution of higher 243
education; (C) books, supplies and equipment; and (D) other necessary 244
expenses, including, but not limited to, transportation; 245
(3) "Eligible institution of higher education" means any institution of 246
higher education that is eligible to participate in a student aid program 247
administered by the United States Department of Education; and 248
(4) "Eligible student" means a student who is or was enrolled at least 249
half-time in a certificate or degree program at an eligible institution of 250
higher education. 251
(b) The maximum annual modification under subparagraph (B)(xxi) 252
of subdivision (20) of subsection (a) of section 12-701 of the general 253
statutes, as amended by this act, shall be equal to the amount of 254
interest paid on a qualified student loan, but shall not exceed two 255
thousand five hundred dollars for each taxpayer, provided (1) the 256
taxpayer's filing status is any filing status except married filing 257
separately, (2) the taxpayer's modified adjusted gross income is not 258
more than seventy-five thousand dollars for taxpayers whose filing 259
status is single, head of household or qualifying widow or widower or 260
not more than one hundred fifty thousand dollars for taxpayers whose 261
filing status is married filing jointly, (3) no other person is claiming an 262
exemption for the taxpayer on such other person's return, (4) the 263
taxpayer is legally obligated to pay interest on a qualified student loan, 264
and (5) the taxpayer paid interest on a qualified student loan. 265
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This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2019, and
applicable to taxable years
commencing on or after
January 1, 2020
12-701(a)(20)(B)
Sec. 2 July 1, 2019, and
applicable to taxable years
commencing on or after
January 1, 2020
New section
Statement of Purpose:
To provide a tax deduction from personal income tax for the payment
of student loan interest.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline,
except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is
not underlined.]
Co-Sponsors: REP. HADDAD, 54th Dist.; SEN. FLEXER, 29th Dist.
REP. MICHEL, 146th Dist.
H.B. 6891