An Act Concerning Income Thresholds For Certain Personal Income Tax Deductions And The Cliff Effect.
If enacted, HB 5095 would modify how personal income tax deductions are calculated for specific groups, particularly retirees and individuals receiving social security. By phasing out these deductions more gradually, the bill intends to support financial stability for these individuals. This change is expected to have positive implications for overall economic health, as it may encourage higher earnings without the immediate fear of losing vital income benefits.
House Bill 5095, introduced by Rep. Devlin, proposes amendments to chapter 229 of the general statutes concerning personal income tax deductions for pensions, annuity income, Social Security benefits, and certain individual retirement account distributions. The bill aims to establish income threshold phase-outs designed to eliminate the 'cliff effect', a situation where a minor increase in income leads to a significant reduction in benefits, thus potentially discouraging individuals from earning more. This bill would provide a more gradual transition for taxpayers, allowing them to retain a portion of their benefits even as their income rises.
The notable points of contention surrounding HB 5095 may arise during discussions about the fiscal implications of revising tax deductions and its effects on state revenue. Proponents are likely to argue that the bill promotes fairness by allowing individuals to earn more without disproportionate loss of benefits. Critics might raise concerns about potential revenue loss for the state, arguing that the adjustments might strain the budget, particularly in the wake of economic uncertainties.