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General Assembly Raised Bill No. 1558
January Session, 2025
LCO No. 7060
Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT CONCERNING INCOME TAXES IMPOSED BY OTHER
JURISDICTIONS ON RESIDENTS OF THE STATE.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Subsection (a) of section 12-704 of the general statutes is 1
repealed and the following is substituted in lieu thereof (Effective January 2
1, 2026, and applicable to taxable years commencing on or after January 1, 3
2026): 4
(a) (1) Any resident or part-year resident of this state shall be allowed 5
a credit, subject to the provisions of subdivision (6) of this subsection, 6
against the tax otherwise due under this chapter in the amount of any 7
income tax imposed on such resident or part-year resident for the 8
taxable year by another state of the United States or a political 9
subdivision thereof or the District of Columbia on income derived from 10
sources therein and [which] that is also subject to tax under this chapter. 11
(2) In the case of a resident, the credit provided under this section 12
shall not exceed the proportion of the tax otherwise due under this 13
chapter that the amount of the taxpayer's Connecticut adjusted gross 14
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income derived from or connected with sources in the other taxing 15
jurisdiction bears to such taxpayer's Connecticut adjusted gross income 16
under this chapter. The provisions of this section shall also apply to 17
resident trusts and estates and, wherever reference is made in this 18
section to residents of this state, such reference shall be construed to 19
include resident trusts and estates. 20
(3) In the case of a part-year resident, the credit provided under this 21
section shall not exceed the proportion of the tax otherwise due during 22
the period of residency under this chapter that the amount of the 23
taxpayer's Connecticut adjusted gross income derived from or 24
connected with sources in the other jurisdiction during the period of 25
residency bears to such taxpayer's Connecticut adjusted gross income 26
during the period of residency under this chapter. The provisions of this 27
section shall also apply to part-year resident trusts and, wherever 28
reference is made in this section to part-year residents of this state, such 29
reference shall be construed to include part-year resident trusts. 30
(4) The allowance of the credit provided under this section shall not 31
reduce the tax otherwise due under this chapter to an amount less than 32
what would have been due if the income subject to taxation by such 33
other jurisdiction were excluded from Connecticut adjusted gross 34
income. 35
(5) For purposes of this subsection, a tax on wages that is paid to 36
another state of the United States or a political subdivision thereof or the 37
District of Columbia by an employer on behalf of an employee and for 38
which a credit is allowed by such other jurisdiction shall be considered 39
an income tax and a comparable credit may be claimed by the resident 40
or part-year resident, subject to the limitations set forth in this 41
subsection, in the form and manner prescribed by the commissioner. 42
(6) Notwithstanding the provisions of subdivisions (2) and (3) of this 43
subsection, the portion of the amount of any credit allowed pursuant to 44
this section that is attributable to income derived from services rendered 45
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while such resident or part-year resident was within this state shall be 46
multiplied by ninety-nine-hundredths per cent. 47
Sec. 2. (Effective from passage) The Attorney General shall study 48
specific steps the office of the Attorney General may take to defend 49
residents of this state from having taxes imposed by another state of the 50
United States or a political subdivision thereof or the District of 51
Columbia on income derived from services rendered while such 52
resident was within this state. Not later than January 1, 2026, the 53
Attorney General shall submit a report, in accordance with the 54
provisions of section 11-4a of the general statutes, of the findings of such 55
study and any recommendations of said office to the joint standing 56
committee of the General Assembly having cognizance of matters 57
relating to finance, revenue and bonding. 58
Sec. 3. (NEW) (Effective from passage) For taxable years commencing 59
on or after January 1, 2020: 60
(1) A resident of this state who satisfies the provisions of 61
subparagraphs (A) to (D), inclusive, of this subdivision shall be allowed 62
a credit against the tax otherwise due for the applicable taxable year 63
under chapter 229 of the general statutes, other than the liability 64
imposed by section 12-707 of the general statutes, in an amount equal to 65
fifty per cent of the amount of taxes owed to this state as a result of the 66
readjustment of the credit for taxes paid to another state of the United 67
States or a political subdivision thereof or the District of Columbia, 68
pursuant to section 12-704 of the general statutes, as amended by this 69
act. To be eligible for the credit under this section, such resident shall 70
have: 71
(A) Paid any income tax or wage tax imposed for the taxable year by 72
another state of the United States or a political subdivision thereof or the 73
District of Columbia; 74
(B) Applied for and been denied a refund from such other jurisdiction 75
for taxes paid to such other jurisdiction on income derived from services 76
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rendered while such resident was within this state; 77
(C) Filed an appeal with a court or tribunal through which such 78
resident formally protested such denial; and 79
(D) Obtained a final decision that resulted in such resident being 80
refunded taxes paid to such other jurisdiction on income derived from 81
services rendered while such resident was within this state. 82
(2) No penalty or interest shall be imposed on any late payment of 83
the tax due under chapter 229 of the general statutes, other than the 84
liability imposed by section 12-707 of the general statutes, if (A) such 85
late payment is attributable to a reduction in the credit for taxes paid 86
under section 12-704 of the general statutes, as amended by this act, (B) 87
such reduction in the credit for taxes paid is the direct result of a refund 88
that a resident of this state received from another state of the United 89
States or a political subdivision thereof or the District of Columbia, (C) 90
such refund relates to income derived from services rendered while 91
such resident was not within such other jurisdiction, and (D) such other 92
jurisdiction requires employee income to be sourced to an employer's 93
location if a nonresident renders services from an out-of-state location. 94
This act shall take effect as follows and shall amend the following
sections:
Section 1 January 1, 2026, and
applicable to taxable years
commencing on or after
January 1, 2026
12-704(a)
Sec. 2 from passage New section
Sec. 3 from passage New section
Statement of Purpose:
To (1) reduce a portion of the amount of the credit for income taxes paid
to other states, (2) require the Attorney General to study ways to defend
residents from having income tax imposed by other jurisdictions on
income derived from services rendered while such resident was within
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this state, and (3) provide a credit to residents who file an appeal
protesting the tax imposed by such other jurisdiction.
[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.]