General Assembly Raised Bill No. 377 seeks to amend Connecticut's tax code by introducing a personal income tax deduction specifically for compensation received by military personnel serving in funeral honor guard details. The bill repeals subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 and replaces it with new provisions that allow for various deductions applicable to federal income tax purposes, including the newly established deduction for military funeral honor guard detail compensation. The bill also retains existing exemptions for certain types of income, such as federal retirement pay for Armed Forces and National Guard members, and is set to take effect on July 1, 2026, applying to taxable years beginning January 1, 2027.

In addition to the military honor guard deduction, Raised Bill No. 377 introduces several other amendments to the tax code, including a structured deduction schedule for pension and annuity income based on federal adjusted gross income, and new deductions for expenses related to organ donation, financial assistance from the Crumbling Foundations Assistance Fund, and IRA distributions. The bill allows for increasing deductions on traditional IRA distributions, starting at 50% in 2024 and reaching full deductibility by 2026, while also establishing tax benefits for first-time homebuyers through contributions to savings accounts. Overall, the bill aims to provide targeted tax relief and incentives for specific groups while adjusting the treatment of various income sources in the state's tax framework.