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General Assembly Raised Bill No. 6884
January Session, 2025
LCO No. 3890
Referred to Committee on HIGHER EDUCATION AND
EMPLOYMENT ADVANCEMENT
Introduced by:
(HED)
AN ACT EXPANDING TAX CREDITS FOR STUDENT LOAN
PAYMENTS TO INCLUDE PASS-THROUGH ENTITIES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 12-217qq of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective January 1, 2026, and 2
applicable to taxable years commencing on or after January 1, 2026): 3
(a) As used in this section: 4
(1) "Commissioner" means the Commissioner of Revenue Services; 5
(2) "Full-time" means required to work at least thirty-five hours per 6
week; 7
(3) "Qualified employee" means an individual who (A) is a resident 8
of the state, (B) has earned [his or her] such individual's first bachelor's 9
degree from an institution of higher education in the immediately 10
preceding five-year period, (C) is employed full-time in the state by a 11
qualified employer, (D) is not an owner, member or partner of such 12
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qualified employer or a family member of an owner, member or partner 13
of such qualified employer, and (E) has received a student education 14
loan; 15
(4) "Qualified employer" means a [corporation] taxpayer licensed to 16
operate a business in the state that is subject to tax under this chapter, 17
[or] chapter 207 or chapter 229; 18
(5) "Qualified small business" means a qualified employer that has 19
gross receipts of not more than five million dollars for the calendar, [or] 20
income or taxable year, as applicable, for which a credit under this 21
section is allowed; 22
(6) "Student education loan" has the same meaning as provided in 23
section 36a-846; and 24
(7) "Student loan servicer" has the same meaning as provided in 25
section 36a-846. 26
(b) (1) For calendar or income years commencing on and after January 27
1, 2025, and for taxable years commencing on and after January 1, 2026, 28
each qualified employer that employs a qualified employee and makes 29
a payment directly to a student loan servicer on behalf of such qualified 30
employee on a student education loan that was used to finance the 31
qualified employee's attendance at an institution of higher education 32
shall be eligible for a credit against the tax imposed under this chapter, 33
[or] chapter 207 or chapter 229, other than the liability imposed by 34
section 12-207. Such credit shall be equal to fifty per cent of the amount 35
of payments made to the outstanding principal balance of such loans by 36
the qualified employer during the calendar, [or] income or taxable year, 37
provided (A) the credit shall not be allowed against the tax imposed 38
under this chapter, [and] chapter 207 and chapter 229 for the same loan 39
payment, and (B) the amount of credit allowed for any calendar, [or] 40
income or taxable year with respect to a specific qualified employee 41
shall not exceed two thousand six hundred twenty-five dollars. 42
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(2) A qualified employer may claim the credit under subdivision (1) 43
of this subsection for a payment made during the part of the calendar, 44
[or] income or taxable year, as applicable, the qualified employee 45
worked and resided in the state, provided a qualified employee who 46
worked and resided in the state for any part of a month shall be deemed 47
to have worked and resided in the state for the entire month for 48
purposes of this section. 49
(c) (1) To claim a credit under subsection (b) of this section, an eligible 50
qualified employer shall file an application with the commissioner in a 51
form and manner prescribed by the commissioner. Such qualified 52
employer shall include a list of qualified employees for whom the 53
qualified employer will be making a payment pursuant to subsection (b) 54
of this section, the total amount the qualified employer will pay toward 55
such qualified employees' student education loans in the calendar, [or] 56
income or taxable year, as applicable, the student loan servicer for each 57
such student education loan and such other information as the 58
commissioner may require for purposes of this section. Upon receipt of 59
an application, the commissioner shall determine and reserve the 60
amount of the credit the qualified employer will be entitled to claim and 61
shall issue a voucher for such amount to the qualified employer. A 62
qualified employer may not claim for any calendar, [or] income or 63
taxable year more than the amount set forth in such voucher. 64
(2) The aggregate amount of tax credits that may be reserved by the 65
commissioner under this section shall not exceed ten million dollars in 66
any one [calendar or income] fiscal year and credits shall be reserved in 67
the order of applications received by the commissioner. 68
(3) A qualified employer that claims the credit under subsection (b) 69
of this section shall provide any documentation required by the 70
commissioner in a form and manner prescribed by the commissioner. 71
(4) If a qualified employer is an S corporation or an entity treated as 72
a partnership for federal income tax purposes, the shareholders or 73
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partners of such qualified employer may claim the credit. If the qualified 74
employer is a single member limited liability company that is 75
disregarded as an entity separate from its owner, the limited liability 76
company's owner may claim the credit. 77
(d) (1) A qualified small business may apply to the commissioner in 78
accordance with the provisions of subdivision (2) of this subsection to 79
exchange any credit allowed under subsection (b) of this section for a 80
credit refund equal to the value of the credit. Any amount of credit 81
refunded under this subsection shall be refunded to the qualified small 82
business in accordance with the provisions of this chapter, [or] chapter 83
207 or chapter 229, as applicable. No interest shall be allowed or paid on 84
any amount of credit refunded under this subsection. Any amount of 85
credit refunded under this subsection shall be subject to the provisions 86
of section 12-39g. 87
(2) Each application for a credit refund under this subsection shall be 88
filed, on such forms and containing such information as prescribed by 89
the commissioner, on or before the original due date of the return 90
prescribed under section 12-205, [or] 12-222 or 12-719, as applicable, for 91
the calendar, [or] income or taxable year for which such credit was 92
earned or, if applicable, the extended due date of such year's return. No 93
application for a credit refund under this subsection may be filed after 94
the due date or extended due date, as the case may be, of such return. 95
(3) A qualified small business may not exchange for any calendar, [or] 96
income or taxable year more than the amount of the credit set forth in 97
the voucher issued by the commissioner pursuant to subsection (c) of 98
this section. 99
This act shall take effect as follows and shall amend the following
sections:
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Section 1 January 1, 2026, and
applicable to taxable years
commencing on or after
January 1, 2026
12-217qq
Statement of Purpose:
To expand the tax credit for employers making student loan payments
on behalf of employees to pass-through entities.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]