House Bill No. 7055 proposes significant amendments to Connecticut's tax laws, particularly concerning property tax abatements and personal income tax deductions. The bill allows municipalities to create programs that provide property tax abatements for the surviving spouses or domestic partners of police officers, firefighters, and emergency medical technicians who have died in the line of duty. This change is marked by the insertion of "or domestic partner, as defined by such ordinance," into Section 12-81x, thereby expanding eligibility for tax abatement. Additionally, the bill modifies personal income tax regulations by repealing certain provisions in Section 12-701 and introducing a new clause that permits the subtraction of income from state-issued obligations from gross income, specifically benefiting volunteer firefighters and emergency medical services personnel through a personal income tax deduction for stipends received.

Moreover, the bill outlines a phased approach to the taxation of pension and annuity income, with exemptions based on adjusted gross income (AGI) thresholds, aiming to provide tax relief to lower and middle-income taxpayers. It also introduces new tax deductions for expenses related to organ donation, licensed marijuana businesses, and student loan reimbursements, while deleting certain existing language to accommodate these changes. The effective dates for the property tax abatement and income tax deductions are set for October 1, 2025, and January 1, 2026, respectively, with a projected revenue loss of $250,000 for the General Fund starting in FY 27 due to the new income tax deduction.

Statutes affected:
Raised Bill: 12-81x, 12-701
PS Joint Favorable Change of Reference: 12-81x, 12-701
FIN Joint Favorable: 12-81x, 12-701
File No. 829: 12-81x, 12-701