House Bill No. 5281, also known as File No. 171, is a legislative proposal to amend the Connecticut General Statutes to include a personal income tax deduction for stipends paid to volunteer firefighters or emergency medical services personnel. The bill specifies that this deduction would be effective from January 1, 2025, and would apply to taxable years starting on or after that date. It outlines various types of income that should be subtracted from gross income for federal income tax purposes when calculating Connecticut adjusted gross income, including Social Security benefits, certain retirement pay, and income from the Connecticut Homecare Option Program for the Elderly, among others. The bill also introduces a new schedule for deductions related to pension or annuity income based on federal adjusted gross income levels, effective from the taxable year commencing on or after January 1, 2024.

The bill further proposes a phased deduction schedule for distributions from individual retirement accounts (excluding Roth IRAs) for taxpayers with federal adjusted gross incomes below certain thresholds, starting with a 25% deduction in the taxable year commencing January 1, 2023, and increasing to a full deduction by January 1, 2026. It allows for deductions for certain payments to volunteer firefighters and emergency medical services personnel, expenses disallowed under federal law due to marijuana being a controlled substance, and other specified items. The bill includes insertions of new legal language, such as the addition of a new deduction for qualified payments not exceeding $2,000 in aggregate, and deletions, such as the removal of the conjunction "and" before the insertion of a new clause. The fiscal impact statement indicates a General Fund revenue loss of $250,000 beginning in fiscal year 2026, with no municipal impact. The bill has received a Joint Favorable report from the Public Safety and Security Committee.