House Republican Press Release

March 6, 2007

Press Office: 860-240-8700

Senior tax relief: GOP proposes legislation to exempt pension benefits from state income tax

House Republicans are pushing legislation that would exempt retirees’ pension benefits from the state income tax in order to eliminate tax payer flight to states where this relief is guaranteed. Connecticut is one of four states that fully tax all pensions as earned income, and one of only five states that provides no relief for veterans. 

With energy and healthcare costs on the rise, House Republicans believe it is more important than ever to take prompt action in order to keep our residents here. 

“Too many seniors are struggling financially, and the taxation on their pension income makes it even more difficult for them to keep up with their expenses. We need to eliminate this double taxation on pensions to help seniors pay their bills, keep their homes, and continue being such an active, valuable part of our community,” said state Rep. Penny Bacchiochi (R-52).

“Our seniors have worked too long to ask them to continue paying taxes on their retirement benefits that the state treats as earned income,” said House Minority Leader Lawrence Cafero. “As a state, we want to keep our retirees in Connecticut because of what they have to offer to ensure we preserve a high standard of living.  Our seniors are the backbone of our volunteer community; they are our parents and grandparents. We owe them that much.”

House Republicans have proposed House Bill 5541 which would eliminate the personal income tax on pensions and Social Security for individuals 62 years of age or older.  This bill would undoubtedly retain more Connecticut residents and reduce the incentive for leaving in order to sustain a more reasonable tax break.

This issue is part of an overall larger effort by House Republicans to provide incentives for not only seniors, but to younger people as well to remain in Connecticut.  Proposed House Bill 5490 provides Connecticut college students with a trust fund consisting of their income tax payments for 10 years after graduation to use as a down payment toward a house.

Connecticut had a net loss of over 7,000 taxpayers of all ages to other states in a period of one year from 2003 to 2004.  Those net 7,393 taxpayers took with them an estimated $404.8 million in AGI (adjusted gross income).

House Republicans have repeatedly proposed tax relief for senior citizens and are stepping up their efforts on this issue again this session.