Substitute Bill No. 1401 establishes Disaster Savings Accounts (DSAs) to assist homeowners in managing costs related to disasters such as wildfires and floods. The bill allows individuals to set up a DSA with a financial institution, permitting only one account per individual, although joint accounts are allowed. Contributions can come from various sources, including employers, with no limits on deposits. The bill also outlines the responsibilities of account holders, including submitting tax returns and account information to the Commissioner of Revenue Services. Additionally, it introduces tax deductions and credits for DSAs, imposes penalties for unauthorized withdrawals, and grants the Commissioner authority to adopt regulations for implementation.

The bill also amends section 12-701 of the general statutes, effective from January 1, 2025, to allow for various subtractions from gross income when calculating Connecticut adjusted gross income. Notable insertions include provisions for subtracting federally exempt income, such as certain dividends and state tax refunds, and specific conditions for Social Security benefits. The bill further details the taxation of pension and annuity income based on income thresholds, provides deductions for retirement account distributions, and introduces a tax credit for employer contributions to DSAs. Overall, the bill aims to simplify the tax process, provide financial support for disaster preparedness, and ensure compliance with federal tax guidelines.

Statutes affected:
Raised Bill: 12-701
BA Joint Favorable Substitute: 12-701
File No. 293: 12-701
JUD Joint Favorable: 12-701
FIN Joint Favorable: 12-701