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General Assembly Substitute Bill No. 5371
February Session, 2022
AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION
FOR HONOR GUARD DETAIL COMPENSATION.
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section 12-701 of the 2022 supplement to the general statutes is repealed 2
and the following is substituted in lieu thereof (Effective January 1, 2023, 3
and applicable to taxable years commencing on or after January 1, 2023): 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 any 7
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
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 Substitute Bill No. 5371
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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 or 33
loss from the sale or other disposition of capital assets for federal income 34
tax purposes, any gain from the sale or exchange of obligations issued 35
by or on behalf of the state of Connecticut, any political subdivision 36
thereof, or public instrumentality, state or local authority, district or 37
similar public entity created under the laws of the state of Connecticut, 38
in the income year such gain was recognized; 39
(viii) Any interest on indebtedness incurred or continued to purchase 40
or carry obligations or securities the interest on which is subject to tax 41
under this chapter but exempt from federal income tax, to the extent that 42
such interest on indebtedness is not deductible in determining federal 43
adjusted gross income and is attributable to a trade or business carried 44
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 Substitute Bill No. 5371
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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 such 52
expenses and premiums are not deductible in determining federal 53
adjusted gross income and are attributable to a trade or business carried 54
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 unmarried 57
individual whose federal adjusted gross income for such taxable year is 58
less than fifty thousand dollars, or as a married individual filing 59
separately whose federal adjusted gross income for such taxable year is 60
less than fifty thousand dollars, or for a husband and wife who file a 61
return under the federal income tax as married individuals filing jointly 62
whose federal adjusted gross income for such taxable year is less than 63
sixty thousand dollars or a person who files a return under the federal 64
income tax as a head of household whose federal adjusted gross income 65
for such taxable year is less than sixty thousand dollars, an amount 66
equal to the Social Security benefits includable for federal income tax 67
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 unmarried 70
individual whose federal adjusted gross income for such taxable year is 71
fifty thousand dollars or more, or as a married individual filing 72
separately whose federal adjusted gross income for such taxable year is 73
fifty thousand dollars or more, or for a husband and wife who file a 74
return under the federal income tax as married individuals filing jointly 75
whose federal adjusted gross income from such taxable year is sixty 76
thousand dollars or more or for a person who files a return under the 77
federal income tax as a head of household whose federal adjusted gross 78
income for such taxable year is sixty thousand dollars or more, an 79
amount equal to the difference between the amount of Social Security 80 Substitute Bill No. 5371
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benefits includable for federal income tax purposes and the lesser of 81
twenty-five per cent of the Social Security benefits received during the 82
taxable year, or twenty-five per cent of the excess described in Section 83
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 federal 86
income tax as an unmarried individual whose federal adjusted gross 87
income for such taxable year is less than seventy-five thousand dollars, 88
or as a married individual filing separately whose federal adjusted gross 89
income for such taxable year is less than seventy-five thousand dollars, 90
or for a husband and wife who file a return under the federal income tax 91
as married individuals filing jointly whose federal adjusted gross 92
income for such taxable year is less than one hundred thousand dollars 93
or a person who files a return under the federal income tax as a head of 94
household whose federal adjusted gross income for such taxable year is 95
less than one hundred thousand dollars, an amount equal to the Social 96
Security benefits includable for federal income tax purposes; and 97
(IV) For the taxable year commencing January 1, 2019, and each 98
taxable year thereafter, for a person who files a return under the federal 99
income tax as an unmarried individual whose federal adjusted gross 100
income for such taxable year is seventy-five thousand dollars or more, 101
or as a married individual filing separately whose federal adjusted gross 102
income for such taxable year is seventy-five thousand dollars or more, 103
or for a husband and wife who file a return under the federal income tax 104
as married individuals filing jointly whose federal adjusted gross 105
income from such taxable year is one hundred thousand dollars or more 106
or for a person who files a return under the federal income tax as a head 107
of household whose federal adjusted gross income for such taxable year 108
is one hundred thousand dollars or more, an amount equal to the 109
difference between the amount of Social Security benefits includable for 110
federal income tax purposes and the lesser of twenty-five per cent of the 111
Social Security benefits received during the taxable year, or twenty-five 112
per cent of the excess described in Section 86(b)(1) of the Internal 113 Substitute Bill No. 5371
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Revenue Code; 114
(xi) To the extent properly includable in gross income for federal 115
income tax purposes, any amount rebated to a taxpayer pursuant to 116
section 12-746; 117
(xii) To the extent properly includable in the gross income for federal 118
income tax purposes of a designated beneficiary, any distribution to 119
such beneficiary from any qualified state tuition program, as defined in 120
Section 529(b) of the Internal Revenue Code, established and 121
maintained by this state or any official, agency or instrumentality of the 122
state; 123
(xiii) To the extent allowable under section 12-701a, contributions to 124
accounts established pursuant to any qualified state tuition program, as 125
defined in Section 529(b) of the Internal Revenue Code, established and 126
maintained by this state or any official, agency or instrumentality of the 127
state; 128
(xiv) To the extent properly includable in gross income for federal 129
income tax purposes, the amount of any Holocaust victims' settlement 130
payment received in the taxable year by a Holocaust victim; 131
(xv) To the extent properly includable in gross income for federal 132
income tax purposes of an account holder, as defined in section 31-133
51ww, interest earned on funds deposited in th e individual 134
development account, as defined in section 31-51ww, of such account 135
holder; 136
(xvi) To the extent properly includable in the gross income for federal 137
income tax purposes of a designated beneficiary, as defined in section 138
3-123aa, interest, dividends or capital gains earned on contributions to 139
accounts established for the designated beneficiary pursuant to the 140
Connecticut Homecare Option Program for the Elderly established by 141
sections 3-123aa to 3-123ff, inclusive; 142
(xvii) To the extent properly includable in gross income for federal 143 Substitute Bill No. 5371
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income tax purposes, any income received from the United States 144
government as retirement pay for a retired member of (I) the Armed 145
Forces of the United States, as defined in Section 101 of Title 10 of the 146
United States Code, or (II) the National Guard, as defined in Section 101 147
of Title 10 of the United States Code; 148
(xviii) To the extent properly includable in gross income for federal 149
income tax purposes for the taxable year, any income from the discharge 150
of indebtedness in connection with any reacquisition, after December 151
31, 2008, and before January 1, 2011, of an applicable debt instrument or 152
instruments, as those terms are defined in Section 108 of the Internal 153
Revenue Code, as amended by Section 1231 of the American Recovery 154
and Reinvestment Act of 2009, to the extent any such income was added 155
to federal adjusted gross income pursuant to subparagraph (A)(xi) of 156
this subdivision in computing Connecticut adjusted gross income for a 157
preceding taxable year; 158
(xix) To the extent not deductible in determining federal adjusted 159
gross income, the amount of any contribution to a manufacturing 160
reinvestment account established pursuant to section 32-9zz in the 161
taxable year that such contribution is made; 162
(xx) To the extent properly includable in gross income for federal 163
income tax purposes, (I) for the taxable year commencing January 1, 164
2015, ten per cent of the income received from the state teachers' 165
retirement system, (II) for the taxable years commencing January 1, 166
2016, to January 1, 2020, inclusive, twenty-five per cent of the income 167
received from the state teachers' retirement system, and (III) for the 168
taxable year commencing January 1, 2021, and each taxable year 169
thereafter, fifty per cent of the income received from the state teachers' 170
retirement system or, for a taxpayer whose federal adjusted gross 171
income does not exceed the applicable threshold under clause (xxi) of 172
this subparagraph, the percentage pursuant to said clause of the income 173
received from the state teachers' retirement system, whichever 174
deduction is greater; 175 Substitute Bill No. 5371
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(xxi) To the extent properly includable in gross income for federal 176
income tax purposes, except for retirement benefits under clause (iv) of 177
this subparagraph and retirement pay under clause (xvii) of this 178
subparagraph, for a person who files a return under the federal income 179
tax as an unmarried individual whose federal adjusted gross income for 180
such taxable year is less than seventy-five thousand dollars, or as a 181
married individual filing separately whose federal adjusted gross 182
income for such taxable year is less than seventy-five thousand dollars, 183
or as a head of household whose federal adjusted gross income for such 184
taxable year is less than seventy-five thousand dollars, or for a husband 185
and wife who file a return under the federal income tax as married 186
individuals filing jointly whose federal adjusted gross income for such 187
taxable year is less than one hundred thousand dollars, (I) for the taxable 188
year commencing January 1, 2019, fourteen per cent of any pension or 189
annuity income, (II) for the taxable year commencing January 1, 2020, 190
twenty-eight per cent of any pension or annuity income, (III) for the 191
taxable year commencing January 1, 2021, forty-two per cent of any 192
pension or annuity income, (IV) for the taxable year commencing 193
January 1, 2022, fifty-six per cent of any pension or annuity income, (V) 194
for the taxable year commencing January 1, 2023, seventy per cent of any 195
pension or annuity income, (VI) for the taxable year commencing 196
January 1, 2024, eighty-four per cent of any pension or annuity income, 197
and (VII) for the taxable year commencing January 1, 2025, and each 198
taxable year thereafter, any pension or annuity income; 199
(xxii) The amount of lost wages and medical, travel and housing 200
expenses, not to exceed ten thousand dollars in the aggregate, incurred 201
by a taxpayer during the taxable year in connection with the donation 202
to another person of an organ for organ transplantation occurring on or 203
after January 1, 2017; 204
(xxiii) To the extent properly includable in gross income for federal 205
income tax purposes, the amount of any financial assistance received 206
from the Crumbling Foundations Assistance Fund or paid to or on 207
behalf of the owner of a residential building pursuant to sections 8-442 208 Substitute Bill No. 5371
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and 8-443; 209
(xxiv) To the extent properly includable in gross income for federal 210
income tax purposes, the amount calculated pursuant to subsection (b) 211
of section 12-704g for income received by a general partner of a venture 212
capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to 213
time; 214
(xxv) To the extent any portion of a deduction under Section 179 of 215
the Internal Revenue Code was added to federal adjusted gross income 216
pursuant to subparagraph (A)(xiv) of this subdivision in computing 217
Connecticut adjusted gross income, twenty-five per cent of such 218
disallowed portion of the deduction in each of the four succeeding 219
taxable years; [and] 220
(xxvi) To the extent properly includable in gross income for federal 221
income tax purposes, for a person who files a return under the federal 222
income tax as an unmarried individual whose federal adjusted gross 223
income for such taxable year is less than seventy-five thousand dollars, 224
or as a married individual filing separately whose federal adjusted gross 225
income for such taxable year is less than seventy-five thousand dollars, 226
or as a head of household whose federal adjusted gross income for such 227
taxable year is less than seventy-five thousand dollars, or for a husband 228
and wife who file a return under the federal income tax as married 229
individuals filing jointly whose federal adjusted gross income for such 230
taxable year is less than one hundred thousand dollars, (I) for the taxable 231
year commencing January 1, 2023, twenty-five per cent of any 232
distribution from an individual retirement account other than a Roth 233
individual retirement account, (II) for the taxable year commencing 234
January 1, 2024, fifty per cent of any distribution from an individual 235
retirement account other than a Roth individual retirement account, (III) 236
for the taxable year commencing January 1, 2025, seventy-five per cent 237
of any distribution from an individual retirement account other than a 238
Roth individual retirement account, and (IV) for the taxable year 239
commencing January 1, 2026, and each taxable year thereafter, any 240
distribution from an individual retirement account other than a Roth 241 Substitute Bill No. 5371
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individual retirement account; and 242
(xxvii) To the extent properly includable in gross income for federal 243
income tax purposes, the amount of any compensation received for 244
attending a funeral as a member of an honor guard detail pursuant to 245
section 27-76.246
This act shall take effect as follows and shall amend the following
sections:
Section 1 January 1, 2023, and
applicable to taxable years
commencing on or after
January 1, 2023
12-701(a)(20)(B)
VA Joint Favorable Subst. C/R FIN