Substitute Bill No. 6876 seeks to establish first-time homebuyer savings accounts in Connecticut, effective January 1, 2026. The bill defines key terms such as "account holder," "qualified beneficiary," and "eligible costs," which encompass down payments and allowable closing costs for purchasing a one-to-four family residence. It allows individuals to create these accounts with financial institutions, either individually or jointly, and permits contributions from various sources, including employers. The bill mandates that account holders submit tax returns and account information to the Commissioner of Revenue Services for tax deduction and credit purposes. A civil penalty of ten percent is imposed on account holders who withdraw funds for non-eligible costs, although exceptions are provided for specific circumstances.

Additionally, the bill amends existing tax laws by repealing and replacing certain provisions related to income types that can be subtracted from gross income for state tax purposes. It introduces new tax benefits for first-time homebuyer savings accounts, allowing for deductions based on contributions made in 2026 and 2027, with specific limits for different filing statuses. The bill also clarifies the tax treatment of various income sources, including pension income and organ donation expenses, while deleting conflicting legal language. Overall, the legislation aims to facilitate homeownership for first-time buyers and provide tax relief to specific groups, including retirees and organ donors, through structured savings mechanisms and associated tax benefits.

Statutes affected:
Raised Bill: 12-701
BA Joint Favorable Substitute: 12-701
File No. 189: 12-701
FIN Joint Favorable: 12-701