General Assembly Raised Bill No. 1401 seeks to establish disaster savings accounts (DSAs) to assist individuals in managing expenses related to disasters such as wildfires and hurricanes. The bill defines DSAs as accounts held at financial institutions specifically for covering eligible disaster-related costs incurred by qualified beneficiaries. Key provisions include allowing unlimited contributions to these accounts, mandating that funds be used solely for eligible expenses, and requiring account holders to submit tax returns and relevant information to the Commissioner of Revenue Services. The bill also imposes a civil penalty of 10% on funds withdrawn for non-eligible costs, with exceptions for specific circumstances, and clarifies that financial institutions are not liable for compliance with DSA requirements.

In addition to establishing DSAs, the bill amends the Connecticut General Statutes regarding income tax regulations. It introduces new legal language that repeals and replaces existing provisions related to allowable subtractions from gross income, including specific categories of income and expenses. Notable insertions include the exclusion of contributions to state tuition programs and the Connecticut Homecare Option Program for the Elderly from gross income, as well as a phased deduction for IRA distributions based on income levels. The bill also provides tax credits for employers contributing to employees' DSAs and mandates recommendations from the Treasurer regarding marketable securities in these accounts by July 1, 2026. Overall, Raised Bill No. 1401 aims to modernize the tax code while providing financial support and incentives for residents facing disaster-related challenges.

Statutes affected:
Raised Bill: 12-701