General Assembly Raised Bill No. 5296 proposes significant changes to Connecticut's personal income tax laws, particularly aimed at providing tax relief to specific groups, including National Guard members and retirees. The bill introduces a new personal income tax deduction for National Guard active duty pay, effective July 1, 2026, by repealing subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 and replacing it with provisions that allow this pay to be deducted from taxable income. Additionally, the bill retains existing subtractions from gross income, such as exempt dividends and certain retirement benefits, while also establishing a phased approach to the taxation of income from the state teachers' retirement system.

Moreover, the bill outlines various deductions for taxpayers, including a gradual increase in the percentage of IRA distributions that can be excluded from taxable income, starting at 50% in 2024 and reaching 100% by 2026 for married individuals filing jointly with a federal adjusted gross income under $150,000. Other insertions include deductions for contributions to first-time homebuyer savings accounts and expenses related to organ donations, while also addressing financial assistance needs through the Crumbling Foundations Assistance Fund. Overall, Raised Bill No. 5296 aims to enhance tax benefits for eligible taxpayers, particularly those with lower incomes or specific financial circumstances, while recognizing the service of National Guard members.