Raised Bill No. 1278 seeks to amend Connecticut's tax statutes concerning long-term care insurance and retirement income. The bill repeals subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 and replaces it with new provisions that clarify income subtractions for tax purposes, including adjustments for federal income tax, exemptions for dividends from regulated investment companies, and allowances for depreciation on property placed in service after September 27, 2017. Additionally, it introduces new subtractions for Social Security benefits based on income thresholds and outlines specific allowances for income from state obligations and expenses related to income production that is subject to state tax but exempt from federal tax.

Moreover, the bill enhances consumer protections in the long-term care insurance market by requiring insurance companies to provide affordable benefit options and hold public hearings for significant premium rate increases. It mandates that any proposed rate increase of 20% or more be spread over three years, with policyholders notified of any increases and given options to adjust their benefits. The bill also introduces a tax deduction for long-term care insurance premiums starting in 2025, while allowing married couples with a federal adjusted gross income under $150,000 to gradually exclude a percentage of IRA distributions from taxable income. Overall, Raised Bill No. 1278 aims to provide tax relief and improve financial security for Connecticut residents, particularly retirees and those utilizing long-term care insurance.

Statutes affected:
Raised Bill: 12-701