HB 6174 — AN ACT EXEMPTING SOCIAL SECURITY BENEFITS FROM STATE INCOME TAX AND STUDYING THE EFFECT OF THE EXEMPTION ON TAXPAYER MIGRATION OUT OF STATE.

General Assembly RaisedSubstitute Bill No.

6174 January Session, 2019 LCOAN No.ACT EXEMPTING SOCIAL SECURITY BENEFITS FROM STATE INCOME TAX AND STUDYING THE EFFECT OF THE EXEMPTION ON TAXPAYER MIGRATION OUT OF STATE.

3343 Referred to Committee on AGING Introduced by:

(AGE) AN ACT EXEMPTING SOCIAL SECURITY BENEFITS FROM STATE INCOME TAX AND STUDYING THE EFFECT OF THE EXEMPTION ON TAXPAYER MIGRATION OUT OF STATE.

(iii) To the extent properly includable in gross income for federal income tax purposes, the amount of any refund or credit for LCOoverpayment No.of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia;

3343(iv) 1To ofthe 9extent Raisedproperly Billincludable No.6174in overpaymentgross of income taxesfor imposedfederal byincome thistax state,purposes orand anynot otherotherwise statesubtracted offrom thefederal UnitedLCO States\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-06174-R011 orof a9 politicalHB.docx subdivisionSubstitute thereof,Bill orNo. the District of Columbia;

(iv)6174 To the extent properly includable in gross income for federal income tax purposes and not otherwise subtracted from federal adjusted gross income pursuant to clause (x) of this subparagraph in computing Connecticut adjusted gross income, any tier 1 railroad retirement benefits;

(viii) Any interest on indebtedness incurred or continued to purchase or carry obligations or securities the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such interest on indebtedness is not deductible in determining federal adjusted gross income and is attributable to a LCOtrade No.or business carried on by such individual;

3343(ix) 2Ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of 9income Raisedwhich Billis No.6174subject tradeto taxation under this chapter but exempt from federal income tax, or businessLCO carried{\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-061742 onof by9 suchR01-HB.docx individual;} Substitute Bill No.

(ix)6174 Ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income which is subject to taxation under this chapter but exempt from federal income tax, or the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such expenses and premiums are not deductible in determining federal adjusted gross income and are attributable to a trade or business carried on by such individual;

(II) For taxable years commencing prior to January 1, 2019, for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is sixty thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-061743 of 9 R01-HB.docx } Substitute Bill No.

33436174 3 of 9 Raised Bill No.6174 files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code;

and (IV) For the taxable year commencing January 1, 2019, and each taxable year thereafter, for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is [seventy-five] one hundred thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is [seventy- five] one hundred thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is one hundred twenty-five thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is one hundred twenty-five thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty- LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-06174-4 of 9 R01-HB.docx } Substitute Bill No.

33436174 4 of 9 Raised Bill No.6174 is one hundred twenty-five thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty- five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code;

(xvi) To the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, as defined in section 3-123aa, interest, dividends or capital gains earned on LCOcontributions No.to accounts established for the designated beneficiary pursuant to the Connecticut Homecare Option Program for the Elderly established by sections 3-123aa to 3-123ff, inclusive;

3343LCO 5{\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-061745 of 9 RaisedR01-HB.docx Bill} No.6174Substitute contributionsBill toNo. accounts established for the designated beneficiary pursuant to the Connecticut Homecare Option Program for the Elderly established by sections 3-123aa to 3-123ff, inclusive;

6174 (xvii) To the extent properly includable in gross income for federal income tax purposes, any income received from the United States government as retirement pay for a retired member of (I) the Armed Forces of the United States, as defined in Section 101 of Title 10 of the United States Code, or (II) the National Guard, as defined in Section 101 of Title 10 of the United States Code;

(xx) To the extent properly includable in gross income for federal income tax purposes, (I) for the taxable year commencing January 1, 2015, ten per cent of the income received from the state teachers' retirement system, (II) for the taxable years commencing January 1, 2016, January 1, 2017, and January 1, 2018, twenty-five per cent of the income received from the state teachers' retirement system, and (III) for the taxable year commencing January 1, 2019, and each taxable year thereafter, fifty per cent of the income received from the state teachers' retirement system or the percentage, if applicable, pursuant to clause LCO(xxi) No.of this subparagraph;

3343(xxi) 6To ofthe 9extent Raisedproperly Billincludable No.6174in (xxi)gross income for federal income tax purposes, except for retirement benefits under clause (iv) of thisLCO subparagraph;{\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-061746 of 9 R01-HB.docx } Substitute Bill No.

(xxi)6174 To the extent properly includable in gross income for federal income tax purposes, except for retirement benefits under clause (iv) of this subparagraph and retirement pay under clause (xvii) of this subparagraph, for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, or as a head of household whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income for such taxable year is less than one hundred thousand dollars, (I) for the taxable year commencing January 1, 2019, fourteen per cent of any pension or annuity income, (II) for the taxable year commencing January 1, 2020, twenty-eight per cent of any pension or annuity income, (III) for the taxable year commencing January 1, 2021, forty- two per cent of any pension or annuity income, (IV) for the taxable year commencing January 1, 2022, fifty-six per cent of any pension or annuity income, (V) for the taxable year commencing January 1, 2023, seventy per cent of any pension or annuity income, (VI) for the taxable year commencing January 1, 2024, eighty-four per cent of any pension or annuity income, and (VII) for the taxable year commencing January 1, 2025, and each taxable year thereafter, any pension or annuity income;

(xxiii) To the extent properly includable in gross income for federal income tax purposes, the amount of any financial assistance received LCOfrom No.the Crumbling Foundations Assistance Fund or paid to or on behalf of the owner of a residential building pursuant to sections 8-442 and 8-443;

3343[, 7and] ofLCO 9{\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-061747 Raised Bill No.6174 from the Crumbling Foundations Assistance Fund or paid to or on behalf of the9 ownerR01-HB.docx of} aSubstitute residentialBill buildingNo. pursuant to sections 8-442 and 8-443;

[,6174 and] (xxiv) To the extent properly includable in gross income for federal income tax purposes, the amount calculated pursuant to subsection (b) of section 12-704g for income received by a general partner of a venture capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to time;

(NEW) (Effective from passage) The Commissioner of Revenue Services shall study any change in migration out of the state of taxpayers sixty-twosixty- two years of age and older after Social Security benefits are fully exempted from income tax for certain income brackets pursuant to section 12-701 of the general statutes, as amended by this act.

LCOThis No.act shall take effect as follows and shall amend the following sections:

3343LCO 8{\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-06174-8 of 9 RaisedR01-HB.docx } Substitute Bill No.

6174 ThisSection act1 shallfrom takepassage effectand as12-701(a)(20)(B) followsapplicable andto shalltaxable amendyears thecommencing followingon sections:or after January 1, 2019 Sec.

Section2 1 from passage andNew 12-701(a)(20)(B)section applicableStatement toof taxableLegislative yearsCommissioners: commencing on or after January 1, 2019 Sec.

2In fromsection passage2, New"(NEW)" sectionwas Statementremoved ofbefore Purpose:the effective date for accuracy.

ToAGE raiseJoint theFavorable incomeSubst. level at which Social Security benefits may be deducted from state income tax and study whether the deductions decrease the numbers of taxpayers age sixty-two and older leaving the state.

[Proposed-LCO deletionsLCO areR01-HB.docx enclosed}OUSERS\BARRYJN\WS\2019HB-06174- in9 brackets.of 9

Proposed additions are indicated by underline, not underlined.] the entire text of a bill or resolution or a section of a bill or resolution is new, it is LCO No.

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