Substitute Bill No. 5344 Summary

• Establishes first-time homebuyer savings accounts allowing individuals to save funds tax-advantaged for down payments and closing costs on Connecticut single-family residences, effective January 1, 2025.

• Account holders can contribute unlimited amounts, receive contributions from employers and others, and invest funds in money market accounts; accounts must be designated by April 15 following establishment year.

• Provides state income tax deductions for account holder contributions (capped at $2,500 annually for single filers and $5,000 for joint filers) and deductions for withdrawals used to pay eligible homebuying costs.

• Imposes 10% civil penalty on non-qualified withdrawals unless funds are transferred to another first-time homebuyer account, withdrawn due to death/disability, used in bankruptcy, or not claimed as a deduction.

• Allows employers a 10% tax credit against state income tax for contributions made to employee first-time homebuyer savings accounts, capped at $2,500 per employee annually.