General Assembly Raised Bill No. 6876 aims to create first-time homebuyer savings accounts, effective January 1, 2026, which will provide tax deductions and credits to assist individuals in saving for their first home. The bill defines key terms such as "account holder," "first-time homebuyer," and "eligible costs," which include down payments and allowable closing costs for purchasing a single-family residence in Connecticut. It allows individuals to establish one or more savings accounts with financial institutions, stipulating that funds can only be used for eligible costs. The bill also imposes a civil penalty of ten percent on account holders who withdraw funds for non-eligible purposes and allows contributions from various sources, including employers, while permitting investments in money market funds.

Additionally, the bill amends existing tax statutes by repealing and replacing specific language regarding the treatment of income for tax purposes, particularly concerning withdrawals from first-time homebuyer savings accounts, which will not be considered income if used for eligible costs. It introduces provisions for tax credits against state income tax for employer contributions to these accounts, capped at $2,500 per account holder, and outlines eligibility based on federal adjusted gross income. The bill also specifies that interest accrued on these accounts will be included in gross income for federal tax purposes starting January 1, 2027, but certain withdrawals will remain tax-free for qualifying individuals. Overall, Raised Bill No. 6876 seeks to facilitate homeownership for first-time buyers while providing a structured savings mechanism and associated tax benefits.

Statutes affected:
Raised Bill: 12-701