Connecticut HB 5445: AN ACT CONCERNING THE AMORTIZABLE BOND PREMIUM SUBTRACTION FOR PURPOSES OF THE PERSONAL INCOME TAX.

Bill Text

LCO 2399 
 
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General Assembly  
Raised Bill No. 5445  
February Session, 2026 
 
LCO No. 2399 
 
 
Referred   to   Committee   on   FINANCE,   REVENUE   AND 
BONDING  
 
 
Introduced by:  
(FIN)  
 
 
 
AN ACT CONCERNING THE AMORTIZABLE BOND PREMIUM 
SUBTRACTION FOR PURPOSES OF THE PERSONAL INCOME TAX.  
Be  it  enacted  by  the  Senate  and  House  of  Representatives  in  General 
Assembly convened: 
 
Section  1.  Subparagraph  (B)  of  subdivision  (20)  of  subsection  (a)  of 1 
section 12-701 of the 2026 supplement to the general statutes is repealed 2 
and the following is substituted in lieu thereof (Effective January 1, 2027, 3 
and applicable to taxable years commencing on or after January 1, 2027): 4 
(B) There shall be subtracted therefrom: 5 
(i) To  the  extent  properly  includable  in  gross  income  for  federal 6 
income tax purposes, any income with respect to which taxation by any 7 
state is prohibited by federal law; 8 
(ii) To the extent allowable under section 12-718, exempt dividends 9 
paid by a regulated investment company; 10 
(iii) To  the  extent  properly  includable  in  gross  income  for  federal 11 
income   tax   purposes, the   amount   of   any   refund   or   credit   for 12 

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overpayment of income taxes imposed by this state, or any other state 13 
of the United States or a political subdivision thereof, or the District of 14 
Columbia; 15 
(iv) To  the  extent  properly  includable  in  gross  income  for  federal 16 
income   tax   purposes   and   not   otherwise   subtracted   from   federal 17 
adjusted  gross  income  pursuant  to  clause  (x)  of  this  subparagraph  in 18 
computing  Connecticut  adjusted  gross  income,  any  tier  1  railroad 19 
retirement benefits; 20 
(v) To  the  extent  any  additional  allowance  for  depreciation  under 21 
Section  168(k)  of  the  Internal  Revenue  Code  for  property  placed  in 22 
service  after  September  27,  2017,  was  added  to  federal  adjusted  gross 23 
income   pursuant   to   subparagraph   (A)(ix)   of   this   subdivision   in 24 
computing Connecticut adjusted gross income, twenty-five per cent of 25 
such   additional   allowance   for   depreciation   in   each   of   the   four 26 
succeeding taxable years; 27 
(vi) To  the  extent  properly  includable  in  gross  income  for  federal 28 
income tax purposes, any interest income from obligations issued by or 29 
on behalf of the state of Connecticut, any political subdivision thereof, 30 
or  public  instrumentality,  state  or  local  authority,  district  or  similar 31 
public entity created under the laws of the state of Connecticut; 32 
(vii) To the extent properly includable in determining the net gain or 33 
loss from the sale or other disposition of capital assets for federal income 34 
tax purposes, any gain from the sale or exchange of obligations issued 35 
by  or  on  behalf  of  the  state  of  Connecticut,  any  political  subdivision 36 
thereof,  or  public  instrumentality,  state  or  local  authority,  district  or 37 
similar public entity created under the laws of the state of Connecticut, 38 
in the income year such gain was recognized; 39 
(viii) (I) Any  interest  on  indebtedness  incurred  or  continued  to 40 
purchase  or  carry  obligations  or  securities  the  interest  on  which  is 41 
subject to tax under this chapter but exempt from federal income tax, to 42 
the  extent  that  such  interest  on  indebtedness  is  not  deductible  in 43 
determining federal adjusted gross income and is attributable to a trade 44 

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or business carried on by such individual, and (II) the amortizable bond 45 
premium  for  the  taxable  year  on  any  bond  the  interest  on  which  is 46 
subject to tax under this chapter but exempt from federal income tax, to 47 
the extent that such premiums are not deductible in determining federal 48 
adjusted gross income; 49 
(ix) Ordinary  and  necessary  expenses  paid  or  incurred  during  the 50 
taxable year for the production or collection of income which is subject 51 
to  taxation  under  this  chapter  but  exempt  from  federal  income  tax,  or 52 
the management, conservation or maintenance of property held for the 53 
production of such income, [and the amortizable bond premium for the 54 
taxable year on any bond the interest on which is subject to tax under 55 
this chapter but exempt from federal income tax,] to the extent that such 56 
expenses [and  premiums] are  not  deductible  in  determining  federal 57 
adjusted gross income and are attributable to a trade or business carried 58 
on by such individual; 59 
(x) (I) For  taxable  years  commencing  prior  to  January  1,  2019,  for  a 60 
person who files a return under the federal income tax as an unmarried 61 
individual whose federal adjusted gross income for such taxable year is 62 
less  than  fifty