Raised Bill No. 5444 seeks to amend Connecticut's personal income tax structure by introducing a tiered tax rate system that adjusts tax thresholds and exemption amounts based on inflation. The bill repeals subsection (a) of section 12-700 and replaces it with a new framework that establishes tax rates for various filing statuses, including unmarried individuals, heads of households, and married couples filing jointly. The proposed rates start at 3.0% for lower income brackets and increase to 6.5% for higher income brackets, effective from October 1, 2026. Additionally, the bill introduces provisions to reduce the taxable income subject to the lowest tax rate for individuals with adjusted gross incomes exceeding specified thresholds, thereby shifting some tax burden to higher earners.

Furthermore, the bill modifies personal exemption amounts and income thresholds, which will be adjusted annually for inflation starting January 1, 2028. For unmarried individuals, the exemption will increase incrementally, while heads of household will have a set exemption of $19,000, both subject to reduction based on adjusted gross income. The bill also clarifies filing requirements for married couples and establishes a single personal exemption of $24,000 for those filing jointly. Overall, Raised Bill No. 5444 aims to create a more equitable and responsive tax system that reflects economic changes and cost of living adjustments, while ensuring that tax obligations remain clear for Connecticut residents.

Statutes affected:
Raised Bill: 12-702