House Bill No. 5115 aims to provide tax relief to individuals affected by cryptocurrency investment fraud or wire fraud by establishing a personal income tax deduction for related losses. The bill amends current law by repealing subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 and replacing it with provisions that allow taxpayers to subtract these losses from their gross income, effective January 1, 2027. This change aligns with federal tax provisions, enabling individuals to deduct amounts that are deductible for federal income tax purposes, specifically targeting losses not compensated by insurance.

In addition to the cryptocurrency-related provisions, HB5115 introduces several modifications to the tax code, including the treatment of various income types and deductions. It specifies that financial assistance from the Crumbling Foundations Assistance Fund and certain IRA distributions will be included in gross income for federal tax purposes, while allowing for a phased exclusion of IRA distributions for lower-income individuals. The bill also includes provisions for first-time homebuyer savings accounts, allowing contributions to be deducted from state taxable income, and clarifies eligibility criteria for these deductions. Overall, the bill seeks to create a more equitable tax environment and is projected to result in a potential General Fund revenue loss of up to $3.8 million annually starting in FY 28.