Raised Bill No. 5303 proposes amendments to the Connecticut tax code, specifically targeting the calculation of Connecticut adjusted gross income for income tax purposes. The bill seeks to repeal and replace subparagraph (B) of subdivision (20) of subsection (a) of section 12-701, with changes effective from passage and applicable to taxable years commencing on or after January 1, 2024. It specifies various types of income to be subtracted from federal adjusted gross income, including income exempt by federal law, certain dividends, state tax refunds or credits, railroad retirement benefits, and interest from state obligations. The bill also details deductions related to Social Security benefits, depreciation allowances, interest on certain indebtedness, and expenses for income production taxed by Connecticut but exempt federally. It includes provisions for subtracting income from Holocaust victims' settlements, state tuition programs, the Connecticut Homecare Option Program for the Elderly, and military retirement pay.

Furthermore, the bill outlines the inclusion and deduction of income from the state teachers' retirement system, pension or annuity income, and provides a schedule for deductions based on federal adjusted gross income levels for pension or annuity income starting from the taxable year commencing on or after January 1, 2024. Deductions are also allowed for lost wages due to organ donation, crumbling foundations assistance, income from venture capital funds, and a portion of disallowed Section 179 deductions. A new provision allows for phased deductions of IRA distributions, increasing from fifty percent in 2024 to one hundred percent by 2026 for eligible taxpayers. Additionally, the bill introduces a $2,000 child income tax deduction for each dependent child seventeen years or under. Other tax-related provisions include treatment of income related to the Earned Income Tax Credit enhancement programs, certain licensed taxpayer expenses, disallowed federal deductions, stock from share plans, student loan reimbursements, and contributions to ABLE accounts. The act aims to establish a child income tax deduction and is applicable to taxable years commencing on or after January 1, 2024.