Substitute House Bill No. 6876 establishes a first-time homebuyer savings account program in Connecticut, effective January 1, 2026. The bill allows individuals to create savings accounts for eligible homebuying expenses, such as down payments and closing costs, with tax deductions available for contributions made to these accounts. Single filers can deduct up to $2,500 annually, while joint filers can deduct up to $5,000. Additionally, employers can receive a tax credit of 10% on contributions made to their employees' accounts, capped at $2,500 per employee. The bill also outlines penalties for non-eligible withdrawals and specifies that account holders must submit tax-related information to the Commissioner of Revenue Services.

The bill modifies existing tax laws by repealing and replacing certain provisions in section 12-701 of the general statutes, clarifying income exclusions for state tax purposes, including specific exemptions for Social Security benefits and other income types. It introduces new income thresholds for tax deductions related to the savings accounts, with single filers required to have an adjusted gross income below $100,000 and joint filers below $200,000. The legislation aims to promote homeownership among first-time buyers while providing tax relief and incentives for low-income individuals and employers contributing to these savings accounts.

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