Substitute House Bill No. 6577 (sHB6577 File No. 686) proposes amendments to the Connecticut general statutes regarding state income tax calculations. The bill includes insertions that allow for the subtraction of certain types of income from federal adjusted gross income when computing Connecticut adjusted gross income, such as income exempt from state taxation by federal law, certain dividends, state income tax refunds or credits, railroad retirement benefits, and more. It also specifies the treatment of Social Security benefits based on income levels and filing statuses for taxable years before and after January 1, 2019. Additionally, the bill addresses the inclusion and deduction of various types of income, such as those received from the state teachers' retirement system and pension or annuity income, and clarifies the calculation of income for general partners of venture capital funds and the disallowed portion of a deduction under Section 179 of the Internal Revenue Code.

Furthermore, sHB6577 introduces a new personal income tax deduction for premiums paid for long-term care insurance policies, effective for taxable years commencing January 1, 2023. This change is expected to result in a revenue loss for the General Fund and will require a one-time cost for updates to the state's tax administration system. The bill also mandates that insurance companies proposing significant rate increases for long-term care policies must spread the increase over at least three years and hold a public hearing before implementing a rate increase exceeding ten percent, providing policyholders with notice. These provisions aim to protect policyholders from abrupt premium increases and will take effect on July 1, 2023.

Statutes affected:
Raised Bill: 12-701
AGE Joint Favorable Change of Reference: 12-701
FIN Joint Favorable: 12-701
File No. 686: 12-701