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HB 5445

AN ACT CONCERNING THE AMORTIZABLE BOND PREMIUM SUBTRACTION FOR PURPOSES OF THE PERSONAL INCOME TAX.

2026 Regular Session Introduced by Devin Carney

HB 5445 allows Connecticut personal income taxpayers to deduct amortizable bond premiums, reducing taxable income for premium bond investors and aligning state tax law with federal rules.

FILE NO. 668
#bonds #federalincometax #incometaxdeductions(state)
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WeVote Research Nonpartisan
Bill Summary · HB 5445

Legislative bill overview

HB 5445 modifies Connecticut's personal income tax code to allow taxpayers a subtraction for amortizable bond premium. This provision would permit individuals who purchase bonds at a premium (above par value) to deduct the annual amortization of that premium from their Connecticut taxable income, aligning state tax treatment with federal tax law.

Why is this important

Bond premium amortization affects investors in taxable bonds who pay above-market prices. Without this subtraction, Connecticut taxpayers could face double taxation on the same income—once federally (where the deduction exists) and again at the state level. This change reduces tax burden on bond investors and brings state law into conformity with federal treatment, potentially encouraging investment in Connecticut and improving tax code consistency.

Potential points of contention

  • Revenue impact: The state loses tax revenue from this subtraction, requiring analysis of fiscal impact during budget constraints
  • Equity concerns: The benefit primarily accrues to higher-income investors who purchase premium bonds, potentially benefiting wealthier taxpayers disproportionately
  • Scope definition: Questions about which bonds qualify, how amortization is calculated, and whether corporate bonds are included alongside government bonds

Compiled from official sources — confirm details with the bill’s official record.

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