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General Assembly Substitute Bill No. 1401
January Session, 2025
AN ACT ESTABLISHING DISASTER SAVINGS ACCOUNTS AND A
RELATED TAX DEDUCTION AND CREDIT.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective from passage) (a) For the purposes of this 1
section: 2
(1) "Account holder" means an individual who, either individually or 3
jointly with another individual, establishes a disaster savings account; 4
(2) "Commissioner" means the Commissioner of Revenue Services; 5
(3) "Disaster savings account" means an account established by one 6
or more account holders with a financial institution that the account 7
holders designate as an account exclusively containing funds to pay or 8
reimburse eligible costs incurred by the qualified beneficiary of the 9
account; 10
(4) "Eligible costs" means costs incurred by a qualified beneficiary for 11
payment (A) of an insurance deductible under a homeowners insurance 12
policy that insures against loss or damage by wildfire, flood, rain, 13
hurricane, tornado or other severe storm, which was incurred because 14
of a claim made for such loss or damage, and (B) for loss or damage to 15
such qualified beneficiary's single-family residence caused by wildfire, 16
flood, rain, hurricane, tornado or other severe storm; 17
(5) "Financial institution" means a bank, out-of-state bank, 18 Substitute Bill No. 1401
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Connecticut credit union, federal credit union or out-of-state credit 19
union, as those terms are defined in section 36a-2 of the general statutes, 20
and any affiliate or third-party provider of such entities; 21
(6) "Qualified beneficiary" means a homeowner who (A) is 22
designated as the qualified beneficiary of a disaster savings account, and 23
(B) resides in a single-family residence in this state that is owned by the 24
homeowner; and 25
(7) "Single-family residence" means a single-family residential 26
dwelling, including, but not limited to, a mobile manufactured home, as 27
defined in section 21-64 of the general statutes, or a residential unit in a 28
cooperative, common interest community or condominium, as such 29
terms are defined in section 47-202 of the general statutes. 30
(b) For purposes of implementing the deductions allowed under 31
subparagraphs (B)(xxxvi) and (B)(xxxvii) of subdivision (20) of 32
subsection (a) of section 12-701 of the general statutes, as amended by 33
this act, and the credit allowed under section 3 of this act, the 34
commissioner shall prepare forms for (1) the designation of accounts as 35
disaster savings accounts, (2) the designation of qualified beneficiaries, 36
and (3) account holders to submit to the commissioner the information 37
described in subparagraph (B) of subdivision (1) of subsection (d) of this 38
section and any additional information that the commissioner 39
reasonably requires pursuant to the provisions of this section. 40
(c) An individual may establish not more than one disaster savings 41
account with a financial institution. Two individuals may jointly 42
establish and serve as the account holders of a disaster savings account, 43
provided such account holders shall file a joint return for the tax 44
imposed under chapter 229 of the general statutes for each taxable year 45
during which such account exists. The account holder or account 46
holders shall, not later than April fifteenth of the taxable year 47
immediately following the taxable year during which such account 48
holder or account holders established a disaster savings account, 49
designate the qualified beneficiary of such account. The account holder 50 Substitute Bill No. 1401
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or account holders of a disaster savings account may designate a new 51
qualified beneficiary of the account at any time, provided there shall not 52
be more than one qualified beneficiary of such account at any time. No 53
individual may establish or serve as an account holder of multiple 54
disaster savings accounts that have the same qualified beneficiary. 55
Disaster savings accounts shall exclusively contain cash and there shall 56
be no limit on the amount of contributions made to, or contained in, such 57
accounts. Any person may contribute to a disaster savings account, 58
including, but not limited to, the employers of the qualified beneficiary, 59
account holder or account holders of such account. If a qualified 60
beneficiary or account holder of a disaster savings account leaves 61
employment with an employer that contributed to such account while 62
such qualified beneficiary or account holder was employed by such 63
employer, such employer shall not seek reimbursement of any 64
contribution to such account. The account holder or account holders 65
may invest funds deposited in a disaster savings account in money 66
market funds. 67
(d) (1) Each account holder shall: 68
(A) Not use any portion of the funds deposited in a disaster savings 69
account to pay any administrative fees or expenses, other than service 70
fees imposed by the depository financial institution, for such account; 71
and 72
(B) Submit to the commissioner such account holder's tax return for 73
each taxable year beginning on or after January 1, 2025, during which a 74
disaster savings account established by such account holder exists, 75
along with: 76
(i) Any information required by the commissioner concerning such 77
disaster savings account for purposes of implementing the deductions 78
allowed under subparagraphs (B)(xxxvi) and (B)(xxxvii) of subdivision 79
(20) of subsection (a) of section 12-701 of the general statutes, as 80
amended by this act, and the credit allowed under section 3 of this act; 81
(ii) The Internal Revenue Service Form 1099 issued by the depository 82 Substitute Bill No. 1401
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financial institution for such disaster savings account; and 83
(iii) If such account holder withdrew funds from such disaster 84
savings account during the taxable year that is the subject of such return, 85
a detailed accounting of all eligible costs and ineligible costs paid or 86
reimbursed using such funds during such taxable year and the balance 87
of funds remaining in such account. 88
(2) Each account holder may withdraw all, or any portion of, the 89
funds contributed to and deposited in a disaster savings account and 90
deposit such funds in another disaster savings account established by 91
such account holder at any financial institution. 92
(e) (1) The commissioner may require that financial institutions 93
furnish certain information about each disaster savings account. 94
(2) A financial institution shall designate an account as a disaster 95
savings account when the account is opened by an account holder. 96
(3) No financial institution shall be required to (A) track the use of 97
any funds withdrawn from a disaster savings account, or (B) allocate 98
funds in a disaster savings account among account holders. 99
(4) No financial institution shall be liable or responsible for (A) 100
determining whether, or ensuring that, an account satisfies the 101
requirements established in this section concerning disaster savings 102
accounts or the funds in disaster savings accounts are used to pay or 103
reimburse eligible costs, or (B) disclosing or remitting taxes or penalties 104
concerning disaster savings accounts unless such disclosure or 105
remittance is required by applicable law. 106
(5) Upon receiving proof of the death of an account holder and all 107
other information required by any contract governing a disaster savings 108
account established by the account holder, the depository financial 109
institution shall distribute the funds in the disaster savings account in 110
accordance with the terms of such contract. 111
(f) (1) Except as provided in subdivision (2) of this subsection, each 112 Substitute Bill No. 1401
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account holder who withdraws funds from a disaster savings account 113
for any reason other than paying or reimbursing the qualified 114
beneficiary of such account for eligible costs incurred by such qualified 115
beneficiary shall be liable to this state for a civil penalty in an amount 116
equal to ten per cent of the withdrawn amount. Such civil penalty shall 117
be collectible by the commissioner. If such funds were deducted by an 118
account holder in accordance with subparagraph (B)(xxxvi) or 119
(B)(xxxvii) of subdivision (20) of subsection (a) of section 12-701 of the 120
general statutes, as amended by this act, then such withdrawn funds 121
shall be considered income. 122
(2) No account holder shall be liable for a penalty under subdivision 123
(1) of this subsection, nor shall funds withdrawn from a disaster savings 124
account be considered income, if the funds withdrawn from the disaster 125
savings account: 126
(A) Are deposited in another disaster savings account pursuant to 127
subdivision (2) of subsection (d) of this section; 128
(B) Are withdrawn due to the death or disability of an account holder 129
who established such account; 130
(C) Constitute a disbursement of the assets of such account pursuant 131
to a filing for protection under the United States Bankruptcy Code, as 132
amended from time to time; or 133
(D) Are not claimed as a deduction pursuant to subparagraph 134
(B)(xxxvi) or (B)(xxxvii) of subdivision (20) of subsection (a) of section 135
12-701 of the general statutes, as amended by this act, by the account 136
holder on a return for the tax imposed under chapter 229 of the general 137
statutes. 138
(g) The commissioner may adopt regulations, in accordance with the 139
provisions of chapter 54 of the general statutes, to implement the 140
provisions of this section. 141
Sec. 2. Subparagraph (B) of subdivision (20) of subsection (a) of 142 Substitute Bill No. 1401
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section 12-701 of the general statutes is repealed and the following is 143
substituted in lieu thereof (Effective from passage and applicable to taxable 144
years commencing on or after January 1, 2025): 145
(B) There shall be subtracted therefrom: 146
(i) To the extent properly includable in gross income for federal 147
income tax purposes, any income with respect to which taxation by any 148
state is prohibited by federal law; 149
(ii) To the extent allowable under section 12-718, exempt dividends 150
paid by a regulated investment company; 151
(iii) To the extent properly includable in gross income for federal 152
income tax purposes, the amount of any refund or credit for 153
overpayment of income taxes imposed by this state, or any other state 154
of the United States or a political subdivision thereof, or the District of 155
Columbia; 156
(iv) To the extent properly includable in gross income for federal 157
income tax purposes and not otherwise subtracted from federal 158
adjusted gross income pursuant to clause (x) of this subparagraph in 159
computing Connecticut adjusted gross income, any tier 1 railroad 160
retirement benefits; 161
(v) To the extent any additional allowance for depreciation under 162
Section 168(k) of the Internal Revenue Code for property placed in 163
service after September 27, 2017, was added to federal adjusted gross 164
income pursuant to subparagraph (A)(ix) of this subdivision in 165
computing Connecticut adjusted gross income, twenty-five per cent of 166
such additional allowance for depreciation in each of the four 167
succeeding taxable years; 168
(vi) To the extent properly includable in gross income for federal 169
income tax purposes, any interest income from obligations issued by or 170
on behalf of the state of Connecticut, any political subdivision thereof, 171
or public instrumentality, state or local authority, district or similar 172 Substitute Bill No. 1401
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public entity created under the laws of the state of Connecticut; 173
(vii) To the extent properly includable in determining the net gain or 174
loss from the sale or other disposition of capital assets for federal income 175
tax purposes, any gain from the sale or exchange of obligations issued 176
by or on behalf of the state of Connecticut, any political subdivision 177
thereof, or public instrumentality, state or local authority, district or 178
similar public entity created under the laws of the state of Connecticut, 179
in the income year such gain was recognized; 180
(viii) Any interest on indebtedness incurred or continued to purchase 181
or carry obligations or securities the interest on which is subject to tax 182
under this chapter but exempt from federal income tax, to the extent that 183
such interest on indebtedness is not deductible in determining federal 184
adjusted gross income and is attributable to a trade or business carried 185
on by such individual; 186
(ix) Ordinary and necessary expenses paid or incurred during the 187
taxable year for the production or collection of income which is subject 188
to taxation under this chapter but exempt from federal income tax, or 189
the management, conservation or maintenance of property held for the 190
production of such income, and the amortizable bond premium for the 191
taxable year on any bond the interest on which is subject to tax under 192
this chapter but exempt from federal income tax, to the extent that such 193
expenses and premiums are not deductible in determining federal 194
adjusted gross income and are attributable to a trade or business carried 195
on by such individual; 196
(x) (I) For taxable years commencing prior to January 1, 2019, for a 197
person who files a return under the federal income tax as an unmarried 198
individual whose federal adjusted gross income for such taxable year is 199
less than fifty thousand dollars, or as a married individual filing 200
separately whose federal adjusted gross income for such taxable year is 201
less than fifty thousand dollars, or for a husband and wife who file a 202
return under the federal income tax as married individuals filing jointly 203
whose federal adjusted gross income for such taxable year is less than 204 Substitute Bill No. 1401
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sixty thousand dollars or a person who files a return under the federal 205
income tax as a head of household whose federal adjusted gross income 206
for such taxable year is less than sixty thousand dollars, an amount 207
equal to the Social Security benefits includable for federal income tax 208
purposes; 209
(II) For taxable years commencing prior to January 1, 2019, for a 210
person who files a return under the federal income tax as an unmarried 211
individual whose federal adjusted gross income for such taxable year is 212
fifty thousand dollars or more, or as a married individual filing 213
separately whose federal adjusted gross income for such taxable year is 214
fifty thousand dollars or more, or for a husband and wife who file a 215
return under the federal income tax as married individuals filing jointly 216
whose federal adjusted gross income from such taxable year is sixty 217
thousand dollars or more or for a person who files a return under the 218
federal income tax as a head of household whose federal adjusted gross 219
income for such taxable year is sixty thousand dollars or more, an 220
amount equal to the difference between the amount of Social Security 221
benefits includable for federal income tax purposes and the lesser of 222
twenty-five per cent of the Social Security benefits received during the 223
taxable year, or twenty-five per cent of the excess described in Section 224
86(b)(1) of the Internal Revenue Code; 225
(III) For the taxable year commencing January 1, 2019, and each 226
taxable year thereafter, for a person who files a return under the federal 227
income tax as an unmarried individual whose federal adjusted gross 228
income for such taxable year is less than seventy-five thousand dollars, 229
or as a married individual filing separately whose federal adjusted gross 230
income for such taxable year is less than seventy-five thousand dollars, 231
or for a husband and wife who file a return under the federal income tax 232
as married individuals filing jointly whose federal adjusted gross 233
income for such taxable year is less than one hundred thousand dollars 234
or a person who files a return under the federal income tax as a head of 235
household whose federal adjusted gross income for such taxable year is 236
less than one hundred thousand dollars, an amount equal to the Social 237
Security benefits includable for federal income tax purposes; and 238 Substitute Bill No. 1401
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(IV) For the taxable year commencing January 1, 2019, and each 239
taxable year thereafter, for a person who files a return under the federal 240
income tax as an unmarried individual whose federal adjusted gross 241
income for such taxable year is seventy-five thousand dollars or more, 242
or as a married individual filing separately whose federal adjusted gross 243
income for such taxable year is seventy-five thousand dollars or more, 244
or for a husband and wife who file a return under the federal income tax 245
as married individuals filing jointly whose federal adjusted gross 246
income from such taxable year is one hundred thousand dollars or more 247
or for a person who files a return under the federal income tax as a head 248
of household whose federal adjusted gross income for such taxable year 249
is one hundred thousand dollars or more, an amount equal to the 250
difference between the amount of Social Security benefits includable for 251
federal income tax purposes and the lesser of twenty-five per cent of the 252
Social Security benefits received during the taxable year, or twenty-five 253
per cent of the excess described in Section 86(b)(1) of the Internal 254
Revenue Code; 255
(xi) To the extent properly includable in gross income for federal 256
income tax purposes, any amount rebated to a taxpayer pursuant to 257
section 12-746; 258
(xii) To the extent properly includable in the gross income for federal 259
income tax purposes of a designated beneficiary, any distribution to 260
such beneficiary from any qualified state tuition program, as defined in 261
Section 529(b) of the Internal Revenue Code, established and 262
maintained by this state or any official, agency or instrumentality of the 263
state; 264
(xiii) To the extent allowable under section 12-701a, contributions to 265
accounts established pursuant to any qualified state tuition program, as 266
defined in Section 529(b) of the Internal Revenue Code, established and 267
maintained by this state or any official, agency or instrumentality of the 268
state; 269
(xiv) To the extent properly includable in gross income for federal 270 Substitute Bill No. 1401
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income tax purposes, the amount of any Holocaust victims' settlement 271
payment received in the taxable year by a Holocaust victim; 272
(xv) To the extent properly includable in the gross income for federal 273
income tax purposes of a designated beneficiary, as defined in section 274
3-123aa, interest, dividends or capital gains earned on contributions to 275
accounts established for the designated beneficiary pursuant to the 276
Connecticut Homecare Option Program for the Elderly established by 277
sections 3-123aa to 3-123ff, inclusive; 278
(xvi) To the extent properly includable in gross income for federal 279
income tax purposes, any income received from the United States 280
government as retirement pay for a retired member of (I) the Armed 281
Forces of the United States, as defined in Section 101 of Title 10 of the 282
United States Code, or (II) the National Guard, as defined in Section 101 283
of Title 10 of the United States Code; 284
(xvii) To the extent properly includable in gross income for federal 285
income tax purposes for the taxable year, any income from the discharge 286
of indebtedness in connection with any reacquisition, after December 287
31, 2008, and before January 1, 2011, of an applicable debt instrument or 288
instruments, as those terms are defined in Section 108 of the Internal 289
Revenue Code, as amended by Section 1231 of the American Recovery 290
and Reinvestment Act of 2009, to the extent any such income was added 291
to federal adjusted gross income pursuant to subparagraph (A)(xi) of 292
this subdivision in computing Connecticut adjusted gross income for a 293
preceding taxable year; 294
(xviii) To the extent not deductible in determining federal adjusted 295
gross income, the amount of any contribution to a manufacturing 296
reinvestment account established pursuant to section 32-9zz in the 297
taxable year that such contribution is made; 298
(xix) To the extent properly includable in gross income for federal 299
income tax purposes, (I) for the taxable year commencing January 1, 300
2015, ten per cent of the income received from the state teachers' 301
retirement system, (II) for the taxable years commencing January 1, 302 Substitute Bill No. 1401
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2016, to January 1, 2020, inclusive, twenty-five per cent of the income 303
received from the state teachers' retirement system, and (III) for the 304
taxable year commencing January 1, 2021, and each taxable year 305
thereafter, fifty per cent of the income received from the state teachers' 306
retirement system or, for a taxpayer whose federal adjusted gross 307
income does not exceed the applicable threshold under clause (xx) of 308
this subparagraph, the percentage pursuant to said clause of the income 309
received from the state teachers' retirement system, whichever 310
deduction is greater; 311
(xx) To the extent properly includable in gross income for federal 312
income tax purposes, except for retirement benefits under clause (iv) of 313
this subparagraph and retirement pay under clause (xvi) of this 314
subparagraph, for a person who files a return under the federal income 315
tax as an unmarried individual whose federal adjusted gross income for 316
such taxable year is less than seventy-five thousand dollars, or as a 317
married individual filing separately whose federal adjusted gross 318
income for such taxable year is less than seventy-five thousand dollars, 319
or as a head of household whose federal adjusted gross income for such 320
taxable year is less than seventy-five thousand dollars, or for a husband 321
and wife who file a return under the federal income tax as married 322
individuals filing jointly whose federal adjusted gross income for such 323
taxable year is less than one hundred thousand dollars, (I) for the taxable 324
year commencing January 1, 2019, fourteen per cent of any pension or 325
annuity income, (II) for the taxable year commencing January 1, 2020, 326
twenty-eight per cent of any pension or annuity income, (III) for the 327
taxable year commencing January 1, 2021, forty-two per cent of any 328
pension or annuity income, and (IV) for the taxable years commencing 329
January 1, 2022, and January 1, 2023, one hundred per cent of any 330
pension or annuity income; 331
(xxi) To the extent properly includable in gross income for federal 332
income tax purposes, except for retirement benefits under clause (iv) of 333
this subparagraph and retirement pay under clause (xvi) of this 334
subparagraph, any pension or annuity income for the taxable year 335
commencing on or after January 1, 2024, and each taxable year 336 Substitute Bill No. 1401
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thereafter, in accordance with the following schedule, for a person who 337
files a return under the federal income tax as an unmarried individual 338
whose federal adjusted gross income for such taxable year is less than 339
one hundred thousand dollars, or as a married individual filing 340
separately whose federal adjusted gross income for such taxable year is 341
less than one hundred thousand dollars, or as a head of household 342
whose federal adjusted gross income for such taxable year is less than 343
one hundred thousand dollars: 344
T1
Federal Adjusted Gross Income Deduction
T2 Less than $75,000 100.0%
T3
$75,000 but not over $77,499 85.0%
T4
$77,500 but not over $79,999 70.0%
T5
$80,000 but not over $82,499 55.0%
T6
$82,500 but not over $84,999 40.0%
T7
$85,000 but not over $87,499 25.0%
T8
$87,500 but not over $89,999 10.0%
T9
$90,000 but not over $94,999 5.0%
T10 $95,000 but not over $99,999 2.5%
T11
$100,000 and over 0.0%
(xxii) To the extent properly includable in gross income for federal 345
income tax purposes, except for retirement benefits under clause (iv) of 346
this subparagraph and retirement pay under clause (xvi) of this 347
subparagraph, any pension or annuity income for the taxable year 348
commencing on or after January 1, 2024, and each taxable year 349
thereafter, in accordance with the following schedule for married 350
individuals who file a return under the federal income tax as married 351
individuals filing jointly whose federal adjusted gross income for such 352
taxable year is less than one hundred fifty thousand dollars: 353
T12
Federal Adjusted Gross Income Deduction
T13
Less than $100,000 100.0%
T14
$100,000 but not over $104,999 85.0%
T15
$105,000 but not over $109,999 70.0% Substitute Bill No. 1401
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T16
$110,000 but not over $114,999 55.0%
T17
$115,000 but not over $119,999 40.0%
T18
$120,000 but not over $124,999 25.0%
T19
$125,000 but not over $129,999 10.0%
T20
$130,000 but not over $139,999 5.0%
T21
$140,000 but not over $149,999 2.5%
T22
$150,000 and over 0.0%
(xxiii) The amount of lost wages and medical, travel and housing 354
expenses, not to exceed ten thousand dollars in the aggregate, incurred 355
by a taxpayer during the taxable year in connection with the donation 356
to another person of an organ for organ transplantation occurring on or 357
after January 1, 2017; 358
(xxiv) To the extent properly includable in gross income for federal 359
income tax purposes, the amount of any financial assistance received 360
from the Crumbling Foundations Assistance Fund or paid to or on 361
behalf of the owner of a residential building pursuant to sections 8-442 362
and 8-443; 363
(xxv) To the extent properly includable in gross income for federal 364
income tax purposes, the amount calculated pursuant to subsection (b) 365
of section 12-704g for income received by a general partner of a venture 366
capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to 367
time; 368
(xxvi) To the extent any portion of a deduction under Section 179 of 369
the Internal Revenue Code was added to federal adjusted gross income 370
pursuant to subparagraph (A)(xiv) of this subdivision in computing 371
Connecticut adjusted gross income, twenty-five per cent of such 372
disallowed portion of the deduction in each of the four succeeding 373
taxable years; 374
(xxvii) To the extent properly includable in gross income for federal 375
income tax purposes, for a person who files a return under the federal 376
income tax as an unmarried individual whose federal adjusted gross 377 Substitute Bill No. 1401
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income for such taxable year is less than seventy-five thousand dollars, 378
or as a married individual filing separately whose federal adjusted gross 379
income for such taxable year is less than seventy-five thousand dollars, 380
or as a head of household whose federal adjusted gross income for such 381
taxable year is less than seventy-five thousand dollars, or for a husband 382
and wife who file a return under the federal income tax as married 383
individuals filing jointly whose federal adjusted gross income for such 384
taxable year is less than one hundred thousand dollars, for the taxable 385
year commencing January 1, 2023, twenty-five per cent of any 386
distribution from an individual retirement account other than a Roth 387
individual retirement account; 388
(xxviii) To the extent properly includable in gross income for federal 389
income tax purposes, for a person who files a return under the federal 390
income tax as an unmarried individual whose federal adjusted gross 391
income for such taxable year is less than one hundred thousand dollars, 392
or as a married individual filing separately whose federal adjusted gross 393
income for such taxable year is less than one hundred thousand dollars, 394
or as a head of household whose federal adjusted gross income for such 395
taxable year is less than one hundred thousand dollars, (I) for the taxable 396
year commencing January 1, 2024, fifty per cent of any distribution from 397
an individual retirement account other than a Roth individual 398
retirement account, (II) for the taxable year commencing January 1, 2025, 399
seventy-five per cent of any distribution from an individual retirement 400
account other than a Roth individual retirement account, and (III) for 401
the taxable year commencing January 1, 2026, and each taxable year 402
thereafter, any distribution from an individual retirement account other 403
than a Roth individual retirement account. The subtraction under this 404
clause shall be made in accordance with the following schedule: 405
T23
Federal Adjusted Gross Income Deduction
T24
Less than $75,000 100.0%
T25
$75,000 but not over $77,499 85.0%
T26
$77,500 but not over $79,999 70.0%
T27 $80,000 but not over $82,499 55.0% Substitute Bill No. 1401
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T28
$82,500 but not over $84,999 40.0%
T29
$85,000 but not over $87,499 25.0%
T30
$87,500 but not over $89,999 10.0%
T31
$90,000 but not over $94,999 5.0%
T32
$95,000 but not over $99,999 2.5%
T33
$100,000 and over 0.0%
(xxix) To the extent properly includable in gross income for federal 406
income tax purposes, for married individuals who file a return under 407
the federal income tax as married individuals filing jointly whose 408
federal adjusted gross income for such taxable year is less than one 409
hundred fifty thousand dollars, (I) for the taxable year commencing 410
January 1, 2024, fifty per cent of any distribution from an individual 411
retirement account other than a Roth individual retirement account, (II) 412
for the taxable year commencing January 1, 2025, seventy-five per cent 413
of any distribution from an individual retirement account other than a 414
Roth individual retirement account, and (III) for the taxable year 415
commencing January 1, 2026, and each taxable year thereafter, any 416
distribution from an individual retirement account other than a Roth 417
individual retirement account. The subtraction under this clause shall 418
be made in accordance with the following schedule: 419
T34
Federal Adjusted Gross Income Deduction
T35
Less than $100,000 100.0%
T36
$100,000 but not over $104,999 85.0%
T37 $105,000 but not over $109,999 70.0%
T38
$110,000 but not over $114,999 55.0%
T39
$115,000 but not over $119,999 40.0%
T40
$120,000 but not over $124,999 25.0%
T41
$125,000 but not over $129,999 10.0%
T42
$130,000 but not over $139,999 5.0%
T43
$140,000 but not over $149,999 2.5%
T44
$150,000 and over 0.0%
(xxx) To the extent properly includable in gross income for federal 420 Substitute Bill No. 1401
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income tax purposes, for the taxable year commencing January 1, 2022, 421
the amount or amounts paid or otherwise credited to any eligible 422
resident of this state under (I) the 2020 Earned Income Tax Credit 423
enhancement program from funding allocated to the state through the 424
Coronavirus Relief Fund established under the Coronavirus Aid, Relief, 425
and Economic Security Act, P.L. 116-136, and (II) the 2021 Earned 426
Income Tax Credit enhancement program from funding allocated to the 427
state pursuant to Section 9901 of Subtitle M of Title IX of the American 428
Rescue Plan Act of 2021, P.L. 117-2; 429
(xxxi) For the taxable year commencing January 1, 2023, and each 430
taxable year thereafter, for a taxpayer licensed under the provisions of 431
chapter 420f or 420h, the amount of ordinary and necessary expenses 432
that would be eligible to be claimed as a deduction for federal income 433
tax purposes under Section 162(a) of the Internal Revenue Code but that 434
are disallowed under Section 280E of the Internal Revenue Code 435
because marijuana is a controlled substance under the federal 436
Controlled Substance Act; 437
(xxxii) To the extent properly includable in gross income for federal 438
income tax purposes, for the taxable year commencing on or after 439
January 1, 2025, and each taxable year thereafter, any common stock 440
received by the taxpayer during the taxable year under a share plan, as 441
defined in section 12-217ss; 442
(xxxiii) To the extent properly includable in gross income for federal 443
income tax purposes, the amount of any student loan reimbursement 444
payment received by a taxpayer pursuant to section 10a-19m; 445
(xxxiv) Contributions to an ABLE account established pursuant to 446
sections 3-39k to 3-39q, inclusive, not to exceed five thousand dollars for 447
each individual taxpayer or ten thousand dollars for taxpayers filing a 448
joint return; [and] 449
(xxxv) To the extent properly includable in gross income for federal 450
income tax purposes, the amount of any payment received pursuant to 451
subsection (c) of section 3-122a; 452 Substitute Bill No. 1401
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(xxxvi) For an account holder, as defined in section 1 of this act, who 453
files a return under the federal income tax as an unmarried individual, 454
a married individual filing separately or a head of household and whose 455
federal adjusted gross income for the taxable year is less than one 456
hundred thousand dollars, or for an account holder, as defined in 457
section 1 of this act, who files a return under the federal income tax as a 458
married individual filing jointly and whose federal adjusted gross 459
income for the taxable year is less than two hundred thousand dollars: 460
(I) To the extent not deductible in determining federal adjusted gross 461
income, an amount equal to the contributions deposited during the 462
taxable year in a disaster savings account established pursuant to 463
subsection (c) of section 1 of this act, less any amounts withdrawn 464
during the taxable year by the account holder from such account 465
pursuant to subparagraph (D) of subdivision (2) of subsection (f) of 466
section 1 of this act. The amount allowed to be claimed under this 467
subclause for the taxable year shall not exceed two thousand five 468
hundred dollars for an unmarried individual, a married individual 469
filing separately or a head of household and five thousand dollars for 470
married individuals filing jointly; and 471
(II) To the extent properly includable in gross income for federal 472
income tax purposes, an amount equal to the sum of all interest accrued 473
on a disaster savings account, established pursuant to subsection (c) of 474
section 1 of this act, during the taxable year; and 475
(xxxvii) To the extent properly includable in gross income for federal 476
income tax purposes, for an account holder who is a qualified 477
beneficiary of a disaster savings account, as those terms are defined in 478
section 1 of this act, who files a return under the federal income tax as 479
an unmarried individual, a married individual filing separately or a 480
head of household and whose federal adjusted gross income for the 481
taxable year is less than one hundred thousand dollars, or for an account 482
holder who is a qualified beneficiary of a disaster savings account, as 483
those terms are defined in section 1 of this act, who files a return under 484
the federal income tax as a married individual filing jointly and whose 485 Substitute Bill No. 1401
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federal adjusted gross income for the taxable year is less than two 486
hundred thousand dollars, an amount equal to any withdrawal from 487
such account that is used to pay or reimburse such qualified beneficiary 488
for eligible costs, as defined in section 1 of this act, incurred by the 489
qualified beneficiary. 490
Sec. 3. (NEW) (Effective January 1, 2026) (a) (1) For the taxable or 491
income year commencing on or after January 1, 2026, but prior to 492
January 1, 2027, there shall be allowed a credit against the tax imposed 493
under chapter 208 or 229 of the general statutes, other than the liability 494
imposed by section 12-707 of the general statutes, for contributions 495
deposited by the employer of an account holder in a disaster savings 496
account, established pursuant to subsection (c) of section 1 of this act, 497
during the taxable or income years commencing on or after January 1, 498
2025, but prior to January 1, 2027, provided such account holder was 499
employed by such employer at the time such contributions were made. 500
(2) For the taxable or income years commencing on or after January 501
1, 2027, there shall be allowed a credit against the tax imposed under 502
chapter 208 or 229 of the general statutes, other than the liability 503
imposed by section 12-707 of the general statutes, for contributions 504
deposited by the employer of an account holder in a disaster savings 505
account, established pursuant to subsection (c) of section 1 of this act, 506
during the taxable or income year, provided such account holder was 507
employed by such employer at the time such contributions were made. 508
(3) The amount of the credit allowed under subdivisions (1) and (2) 509
of this subsection shall be equal to ten per cent of the amount of the 510
contributions made by the employer into the disaster savings accounts 511
of account holders of such accounts during the income or taxable year, 512
provided the amount of the credit allowed for any income or taxable 513
year with respect to a specific account holder shall not exceed two 514
thousand five hundred dollars. 515
(b) If the employer is an S corporation or an entity treated as a 516
partnership for federal income tax purposes, the credit may be claimed 517 Substitute Bill No. 1401
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by the shareholders or partners of the employer. If the employer is a 518
single member limited liability company that is disregarded as an entity 519
separate from its owner, the credit may be claimed by such limited 520
liability company's owner, provided such owner is a person subject to 521
the tax imposed under chapter 208 or 229 of the general statutes. Any 522
employer claiming the credit shall provide to the Department of 523
Revenue Services documentation supporting such claim in the form and 524
manner prescribed by the Commissioner of Revenue Services. 525
This act shall take effect as follows and shall amend the following
sections:
Section 1 from passage New section
Sec. 2 from passage and
applicable to taxable years
commencing on or after
January 1, 2025
12-701(a)(20)(B)
Sec. 3 January 1, 2026 New section
Statement of Legislative Commissioners:
In Section 1(c), "employers of the qualified" was changed to "the
employers of the qualified" for clarity; in Section 1(d)(1)(B)(i), "the
deduction allowed under subparagraph (B) of subdivision (20)" was
changed to "the deductions allowed under subparagraphs (B)(xxxvi)
and (B)(xxxvii) of subdivision (20)" for accuracy; and in Sections 1(f)(1)
and 1(f)(2)(D), "subparagraph (B) of subdivision (20)" was changed to
"subparagraph (B)(xxxvi) or (B)(xxxvii) of subdivision (20)" for
accuracy.
BA Joint Favorable Subst.