Senate Bill No. 1278 seeks to amend the Connecticut tax code to provide clarity and fairness in the taxation of long-term care insurance premiums and related income. The bill proposes to repeal subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 and replace it with new provisions that allow for the subtraction of certain income types from gross income, including refunds for overpayment of income taxes and tier 1 railroad retirement benefits. Additionally, it introduces a personal income tax deduction for long-term care insurance premiums, effective for taxable years beginning on or after January 1, 2025. The bill also mandates that long-term care insurers hold public hearings before implementing premium rate increases exceeding 10%, ensuring policyholders are informed of their options in response to such increases.

Furthermore, the bill outlines specific provisions regarding the treatment of Social Security benefits and other income sources, establishing different thresholds for various filing statuses to ensure tax relief for lower-income individuals. It specifies that financial assistance from the Crumbling Foundations Assistance Fund and certain IRA distributions will be included in gross income, with exemptions based on adjusted gross income. The bill also details a schedule for pension and annuity income deductions, allowing for a 100% deduction for individuals earning less than $75,000, which gradually decreases with higher income levels. Overall, SB1278 aims to enhance consumer protection, provide tax relief, and ensure a fair tax structure for residents in Connecticut.

Statutes affected:
Raised Bill: 12-701
AGE Joint Favorable Change of Reference: 12-701
INS Joint Favorable: 12-701
File No. 284: 12-701