House Bill 5344 (sHB5344 File No. 129) establishes First-Time Homebuyer Savings Accounts in Connecticut, effective January 1, 2025. These accounts are designed to help individuals save for purchasing a single-family residence within the state, with provisions for tax deductions and credits. Contributions to these accounts can be made by any person, including employers, and can be invested in money market funds. The bill outlines the responsibilities of account holders, such as the prohibition of using funds for administrative fees and the requirement to submit tax returns and accountings for withdrawals. Financial institutions are not required to track the use of funds or ensure their proper use. A civil penalty of 10% is imposed on non-eligible withdrawals, which are also considered taxable income. The bill also includes provisions for the tax treatment of various types of income and expenses, repealing and replacing certain tax code sections, and introducing a phased deduction schedule for IRA distributions based on income levels.

The bill provides personal income tax deductions for contributions to these accounts, with a maximum deduction of $2,500 for individuals and $5,000 for joint filers, and a business tax credit for employer contributions capped at $2,500 per employee. The Department of Revenue Services is tasked with implementing the tax deduction and credit, while the Treasurer is to make recommendations regarding marketable securities in these accounts. The fiscal impact statement anticipates a General Fund revenue loss, with one-time costs for system updates and administrative expenses. The bill's tax deductions and credits are expected to result in revenue losses that will grow over time, depending on program utilization. The bill is effective from January 1, 2025, with certain sections effective upon passage, and has received a Joint Favorable Substitute from the Banking Committee.