Sec. 12-506. Imposition of tax on dividends, interest income and capital gains. - Connecticut Statutes

      Sec. 12-506. Imposition of tax on dividends, interest income and capital gains. (a) A tax is hereby imposed on (1) all dividends and interest income earned, received in fact or constructively, accrued or credited to the taxpayer during his taxable year except that no such tax shall be imposed unless the taxpayer's adjusted gross income in such year equals or exceeds fifty-four thousand dollars, in accordance with the following schedule:

Adjusted Gross Income
In Taxable Year
Rate of Tax
On All Dividends
And Interest Income At least $54,000
    but less than $56,000    .75% At least $56,000
    but less than $58,000  1.5% At least $58,000
    but less than $60,000     2% At least $60,000
    but less than $62,0002.75% At least $62,000
    but less than $66,000  3.5% At least $66,000
    but less than $70,000     4% At least $70,000
    but less than $74,0004.75% At least $74,000
    but less than $78,000  5.5% At least $78,000
    but less than $82,000     6% At least $82,000
    but less than $86,0006.75% At least $86,000
    but less than $90,000  7.5% At least $90,000
    but less than $100,0008.75% $100,000 and over
9.75%

and (2) at the rate of four and three-fourths per cent on all gains from the sale or exchange of capital assets which have been earned, received in fact or constructively, accrued or credited to the taxpayer during his taxable year subject to the exemptions allowed in section 12-506c, and section 12-506f, when applicable, provided the amount of tax payable by any taxpayer under this subdivision (2) with respect to such gains for any taxable year may not exceed an amount equal to three and four-tenths per cent of the adjusted gross income of such taxpayer for such taxable year, as determined for purposes of the federal income tax.

      (b) Any taxpayer whose adjusted gross income in any taxable year is less than fifty-four thousand dollars and whose net gains from the sale or exchange of capital assets in such year do not exceed (1) two hundred dollars in the case of a husband and wife and (2) one hundred dollars in all other cases or any taxpayer whose total tax liability as determined under subsection (a) of this section in respect to any taxable year would be less than ten dollars and any taxpayer who is sixty-five years of age or older and whose adjusted gross income in any taxable year, less any gains from the sale or exchange of capital assets, is less than ten thousand dollars and any taxpayer whose adjusted gross income in any taxable year is below the level at which such taxpayer would be required to file an income tax return under the Internal Revenue Code of 1986 or any subsequent corresponding internal revenue code of the United States, as from time to time amended, shall not be subject to the tax imposed by subsection (a) of this section, and shall not be required to file any return under the provisions of section 12-508, for such year. For purposes of this subsection, in the case of a husband and wife both of whom are residents of this state and who file for the taxable year a single federal income tax return jointly, they shall be considered a taxpayer who is sixty-five years of age or older if either of them is sixty-five years of age or older.

      (June, 1969, P.A. 1, S. 25, 27; June, 1971, P.A. 8, S. 10; 1972, P.A. 2, S. 1; P.A. 73-356, S. 2, 3, 5, 10; P.A. 74-63, S. 1, 5; P.A. 75-213, S. 43, 53; P.A. 77-370, S. 10, 13; P.A. 80-76, S. 1, 2; June Sp. Sess. P.A. 83-1, S. 11, 15; P.A. 85-159, S. 12, 19; 85-455, S. 1, 2; 85-469, S. 4, 6; P.A. 86-397, S. 4, 10; P.A. 87-559, S. 2, 3; P.A. 89-211, S. 26; 89-251, S. 17, 203; June Sp. Sess. P.A. 91-3, S. 124, 168.)

      History: 1971 act amended Subsec. (a) to include dividends in tax, to delete obsolete reference to inapplicability to gains on sale or exchange of capital assets after June 30, 1971, to add reference to exemptions and to specify applicability of tax after December 31, 1969, amended Subsec. (b) to delete provision for $100 or $200 exemption for single or joint taxpayers and added Subsecs. (c) to (e) re calculation of exemptions; 1972 act replaced Subsec. (b) re minimum tax of $5 with new provisions re exemption from tax when gains $100 or less, effective February 17, 1972, and applicable to taxable years or portions thereof commencing after December 31, 1970; P.A. 73-356 repealed Subsecs. (c) to (e), substituted "net gains" for "dividends and gains", substituted Sec. 12-506c for reference to repealed Subsec. (c) and deleted obsolete reference to December 31, 1970, in Subsec. (a) and amended Subsec. (b) to allow exemption for jointly filing husband and wife when gains do not exceed $200 and to substitute "net gains" for "gross income from gains ... and dividends"; P.A. 74-63 added reference to Sec. 12-506f in Subsec. (a), effective April 26, 1974, and applicable to taxable years beginning on and after January 1, 1974; P.A. 75-213 increased tax rate from 6% to 7% and included dividends in Subsec. (a) and amended Subsec. (b) to simplify language and to limit applicability to taxpayers whose adjusted gross income is less than $20,000, effective July 1, 1975, and applicable to taxable years commencing on and after January 1, 1975; P.A. 77-370 added table for graduated tax rate for tax on dividends, removing them from straight 7% rate, effective July 1, 1977, and applicable to taxable years commencing on and after January 1, 1977; P.A. 80-76 exempted from tax those whose liability would be less than $10, effective July 1, 1980, and applicable to taxable years commencing on or after January 1, 1980; June Sp. Sess. P.A. 83-1 added interest income as a form of investment income subject to tax under Subsec. (a)(1), to be in addition to dividends already subject to tax under said subdivision, provided that tax shall not be imposed under said subdivision unless taxpayer's adjusted gross income for the taxable year is $50,000 or more in lieu of $20,000 as previously provided and imposed tax on interest income and dividends in accordance with a schedule of rates increasing from 6% to 13% in relation to the schedule of increasing levels of adjusted gross income in said subdivision, effective July 1, 1983, and applicable to taxable years of taxpayers commencing on or after January 1, 1983; P.A. 85-159 amended Subsec. (a) to revise tax rate schedule and Subsec. (b) to exempt taxpayers who are 65 or older and have less than $10,000 in income, exclusive of capital gains, effective May 16, 1985, and applicable to taxable years of taxpayers commencing on or after January 1, 1985; P.A. 85-455 amended Subsec. (b) by providing that any taxpayer whose adjusted gross income for any year is below the level at which such taxpayer would be required to file a return for purposes of the federal income tax shall not be subject to the tax imposed under this section, effective June 24, 1985, and applicable to tax years of taxpayers commencing on or after January 1, 1985; P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 86-397 reduced the rate of tax imposed on dividends and interest income for each bracket of adjusted gross income in the schedule of tax by the amount of 1% of such dividends and interest income and accordingly, eliminated the tax with respect to adjusted gross income under $54,000 in a taxable year, effective June 11, 1986, and applicable to dividends and interest income for taxable years commencing on or after January 1, 1986; P.A. 87-559 amended Subsec. (a) by deleting the word "net" immediately preceding "gains from the sale or exchange of capital assets" in the imposition of tax statement in Subsec. (a)(2), for purposes of consistency with the definition of "gains from the sale or exchange of capital assets" in Sec. 12-505 which defines such gains as "net" gains, effective July 6, 1987, and applicable to taxable years of taxpayers commencing on or after January 1, 1987; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 89-251 amended Subsec. (a) by adding new brackets in the schedule of adjusted gross income applicable in determining tax with increased rates of tax at most levels of such income and by adding the provision with respect to tax on capital gains limiting such tax to a maximum of 5% of adjusted gross income, effective July 1, 1989, and applicable to taxable years commencing on or after January 1, 1989; June Sp. Sess. P.A. 91-3 amended Subsec. (a) by adding new brackets with regard to the dividends and interest income tax to reduce the rate by approximately one-third and to reduce the capital gains tax from 7% to 4.75%, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

      Cost, basis for determining gain. 163 C. 520. "Fraction" means proper fractions only. 170 C. 567. Cited. 173 C. 506. Cited. 199 C. 133. Allows application of federal tax principles regardless of length of taxable year in Connecticut. 213 C. 19. Cited. 234 C. 614.

      Subsec. (a):

      Cited. 188 C. 206.