Substitute Senate Bill No. 1401 establishes disaster savings accounts (DSAs) to assist homeowners in covering eligible costs incurred from disasters such as wildfires and floods. The bill allows individuals to maintain one DSA, with contributions permitted from various sources, including employers. It mandates that account holders submit tax returns detailing their DSAs to the Commissioner of Revenue Services. Funds in a DSA are restricted to eligible costs, with penalties for unauthorized withdrawals, and financial institutions are not responsible for monitoring fund usage. The bill also introduces new tax deductions and credits related to these accounts, specifically amending section 12-701 of the general statutes to facilitate these changes.

In addition to the DSA provisions, the bill modifies the treatment of various income types for tax purposes, including the exclusion of certain income from gross income calculations and adjustments to Social Security benefits based on federal adjusted gross income thresholds. It allows for tax deductions for contributions to DSAs, with limits set at $2,500 for individuals and $5,000 for joint filers, and introduces a tax credit for employers contributing to their employees' accounts. The legislation is projected to result in a General Fund revenue loss and requires the Department of Revenue Services to implement the new tax benefits. Overall, the bill aims to provide financial relief and encourage savings for disaster-related expenses while offering tax incentives for both individuals and employers.

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