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General Assembly Raised Bill No. 1462
January Session, 2025
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Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT ESTABLISHING A TAX CREDIT FOR EMPLOYER
CONTRIBUTIONS TO EMPLOYEES' CHET ACCOUNTS AND
CONCERNING THE CONNECTICUT HIGHER EDUCATION TRUST
AND CONNECTICUT BABY SCHOLARS FUND.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective July 1, 2025, and applicable to income and 1
taxable years commencing on or after January 1, 2025) (a) (1) There shall be 2
allowed a credit against the tax imposed under chapter 208 or 229 of the 3
general statutes, other than the liability imposed by section 12-707 of the 4
general statutes, for contributions made by a taxpayer into a CHET 5
account, as defined in section 3-22f of the general statutes, as amended 6
by this act, of an employee of such taxpayer. 7
(2) The amount of the credit shall be equal to twenty-five per cent of 8
the amount of the contributions made by the taxpayer into the CHET 9
accounts of employees of such taxpayer for the income or taxable year, 10
provided the amount of the credit allowed for any income or taxable 11
year with respect to a specific employee shall not exceed five hundred 12
dollars. 13
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(b) If the taxpayer is an S corporation or an entity treated as a 14
partnership for federal income tax purposes, the credit may be claimed 15
by the shareholders or partners of the taxpayer. If the taxpayer is a single 16
member limited liability company that is disregarded as an entity 17
separate from its owner, the credit may be claimed by such limited 18
liability company's owner, provided such owner is a person subject to 19
the tax imposed under chapter 208 or 229 of the general statutes. 20
Sec. 2. Section 3-22f of the general statutes is repealed and the 21
following is substituted in lieu thereof (Effective July 1, 2025): 22
As used in sections 3-22f to 3-22p, inclusive, as amended by this act: 23
(1) ["Depositor" means any person making a deposit, payment, 24
contribution, gift or otherwise to the trust pursuant to a participation 25
agreement] "Account owner" means the owner or any successor owner 26
of a CHET account; 27
(2) "CHET account" means an account in the trust, established 28
pursuant to a participation agreement, into which contributions are 29
made for the purpose of meeting the qualified higher education 30
expenses of a designated beneficiary of such account; 31
[(2)] (3) "Designated beneficiary" [means (A) any individual (i) state 32
resident originally designated in the participation agreement, (ii) 33
subsequently designated who is a family member as defined in Section 34
2032A(e)(2) of the Internal Revenue Code, or (iii) receiving a scholarship 35
from interests in the trust purchased by a state or local government or 36
an organization described in Section 501(c)(3) of the Internal Revenue 37
Code and qualified under Section 529 of the Internal Revenue Code, or 38
(B) any other designated beneficiary qualifying under said Section 529 39
enrolled in the trust] has the same meaning as provided in Section 529 40
of the Internal Revenue Code; 41
[(3)] (4) "Eligible educational institution" [means an institution of 42
higher education qualifying under] has the same meaning as provided 43
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in Section 529 of the Internal Revenue Code; [as an eligible educational 44
institution;] 45
[(4)] (5) "Internal Revenue Code" means the Internal Revenue Code 46
of 1986, or any subsequent corresponding internal revenue code of the 47
United States, as amended from time to time; [amended;] 48
[(5) "Participation agreements" means agreements between the trust 49
and depositors for participation in a savings plan for a designated 50
beneficiary] 51
(6) "Participation agreement" means the agreement between the trust 52
and the account owner for participation in a CHET account for a 53
designated beneficiary; 54
[(6)] (7) "Qualified higher education expenses" [means tuition, fees, 55
books, supplies and equipment required for the enrollment or 56
attendance of a designated beneficiary at an eligible educational 57
institution, including undergraduate and graduate schools and any 58
other higher education expenses that may be permitted by] has the same 59
meaning as provided in Section 529 of the Internal Revenue Code; and 60
[(7)] (8) "Trust" means the Connecticut Higher Education Trust. 61
Sec. 3. Section 3-22h of the general statutes is repealed and the 62
following is substituted in lieu thereof (Effective July 1, 2025): 63
The Treasurer, on behalf of the trust and for purposes of the trust, 64
may: 65
(1) Receive and invest moneys in the trust in any instruments, 66
obligations, securities or property in accordance with section 3-22i, as 67
amended by this act; 68
(2) Establish [consistent] terms for [each] the participation agreement 69
[, bulk deposit, coupon or installment payments] and the administration 70
of CHET accounts, including, but not limited to, (A) the method of 71
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payment into the trust by payroll deduction, transfer from bank 72
accounts or otherwise, (B) the termination, withdrawal or transfer of 73
payments under the trust, including transfers to or from a qualified 74
tuition program established by another state pursuant to Section 529 of 75
the Internal Revenue Code, (C) penalties for distributions not used [or 76
made in accordance with Section 529(b)(3) of the Internal Revenue 77
Code] for qualified higher education expenses, (D) changing of the 78
identity of the designated beneficiary, and (E) any charges or fees in 79
connection with the administration of the trust; 80
(3) Enter into one or more contractual agreements, including, but not 81
limited to, contracts for legal, actuarial, accounting, custodial, advisory, 82
management, administrative, advertising, marketing and consulting 83
services for the trust and pay for such services from the gains and 84
earnings of the trust; 85
(4) Procure insurance in connection with the trust's property, assets, 86
activities, or deposits or contributions to the trust; 87
(5) Apply for, accept and expend gifts, grants, or donations from 88
public or private sources to enable the trust to carry out its objectives; 89
(6) Adopt regulations in accordance with chapter 54 for purposes of 90
sections 3-22f to 3-22p, inclusive, as amended by this act; 91
(7) Sue and be sued; 92
(8) Establish one or more funds within the trust and maintain 93
separate accounts for each designated beneficiary; and 94
(9) Take any other action necessary to carry out the purposes of 95
sections 3-22f to 3-22p, inclusive, as amended by this act, and incidental 96
to the duties imposed on the Treasurer pursuant to said sections. 97
Sec. 4. Section 3-22i of the general statutes is repealed and the 98
following is substituted in lieu thereof (Effective July 1, 2025): 99
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(a) Notwithstanding sections 3-13 to 3-13h, inclusive, the Treasurer 100
shall invest the amounts on deposit in the trust in a manner reasonable 101
and appropriate to achieve the objectives of the trust, exercising the 102
discretion and care of a prudent person in similar circumstances with 103
similar objectives. The Treasurer shall give due consideration to rate of 104
return, risk, term or maturity, diversification of the total portfolio within 105
the trust, liquidity, the projected disbursements and expenditures, and 106
the expected payments, deposits, contributions and gifts to be received. 107
The Treasurer shall not require the trust to invest directly in obligations 108
of the state or any political subdivision of the state or in any investment 109
or other fund administered by the Treasurer. 110
(b) (1) The Treasurer may retain investment advisors to make such 111
investments on behalf of the Treasurer and may delegate to such 112
advisors the authority to act in place of the Treasurer in (A) the 113
investment or reinvestment of all or parts of the amounts on deposit in 114
the trust, and (B) the holding, purchasing, selling, assigning, 115
transferring or disposing of any or all of the securities and investments 116
in which such amounts have been invested and the proceeds of such 117
securities and investments. Any such investment advisor shall be 118
registered with the Securities and Exchange Commission unless such 119
advisor is exempt from registration pursuant to federal law. 120
(2) Any investments made by an investment advisor pursuant to this 121
subsection shall be made solely in the interest of account owners and 122
designated beneficiaries and for the exclusive purposes of providing 123
benefits to designated beneficiaries for qualified higher education 124
expenses and for defraying reasonable expenses of administering the 125
trust and CHET accounts. The assets of the trust shall be continuously 126
invested and reinvested in a manner consistent with the objectives of the 127
trust until disbursed, [for qualified educational expenses,] expended on 128
expenses incurred by the operations of the trust [,] or refunded to the 129
[depositor] account owner or designated beneficiary [on] in accordance 130
with the conditions provided in the participation agreement. 131
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Sec. 5. Section 3-22k of the general statutes is repealed and the 132
following is substituted in lieu thereof (Effective July 1, 2025): 133
On or before December thirty-first, annually, the Treasurer shall 134
submit a financial report, pursuant to section 3-37, to the Governor on 135
the operations of the trust including the receipts, disbursements, assets, 136
investments [,] and liabilities and administrative costs of the trust for the 137
prior fiscal year. The Treasurer shall also submit such report to the 138
Connecticut Higher Education Trust Advisory Committee established 139
pursuant to section 3-22e, and make the report available to each 140
[depositor] account owner and designated beneficiary. 141
Sec. 6. Section 3-22m of the general statutes is repealed and the 142
following is substituted in lieu thereof (Effective July 1, 2025): 143
The state pledges to [depositors] account owners, designated 144
beneficiaries and with any party who enters into contracts with the trust, 145
pursuant to the provisions of sections 3-22f to 3-22p, inclusive, as 146
amended by this act, that the state will not limit or alter the rights under 147
said sections vested in the trust or contract with the trust until such 148
obligations are fully met and discharged and such contracts are fully 149
performed on the part of the trust, provided nothing contained in this 150
section shall preclude such limitation or alteration if adequate provision 151
is made by law for the protection of such [depositors] account owners 152
and designated beneficiaries pursuant to the obligations of the trust or 153
parties who entered into such contracts with the trust. The trust, on 154
behalf of the state, may include this pledge and undertaking for the state 155
in participation agreements and such other obligations or contracts. 156
Sec. 7. Section 3-22o of the general statutes is repealed and the 157
following is substituted in lieu thereof (Effective July 1, 2025): 158
The Treasurer shall take any action necessary to ensure that the trust 159
complies with all applicable requirements of federal and state laws, 160
rules and regulations to the extent necessary for the trust to constitute a 161
qualified [state] tuition program and be exempt from taxation under 162
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Section 529 of the Internal Revenue Code. 163
Sec. 8. Section 3-22p of the general statutes is repealed and the 164
following is substituted in lieu thereof (Effective July 1, 2025): 165
(a) Notwithstanding any provision of the general statutes, [no] 166
moneys invested in the Connecticut Higher Education Trust, [shall be 167
considered to be an asset for purposes of determining an individual's 168
eligibility for assistance under the temporary family assistance program, 169
as described in section 17b-112, programs funded under the federal Low 170
Income Home Energy Assistance Program block grant, and the federally 171
appropriated weatherization assistance program, as described in section 172
16a-41i] contributions to a CHET account, distributions from a CHET 173
account for qualified higher education expenses and any other 174
distributions that are not includable in federal gross income under 175
Section 529 of the Internal Revenue Code shall be disregarded for 176
purposes of determining an individual's eligibility for assistance under 177
any means-tested public assistance program administered by the state 178
or any political subdivision thereof. 179
(b) Notwithstanding any provision of the general statutes, no moneys 180
invested in said trust shall be considered to be an asset for purposes of 181
determining an individual's eligibility for need-based, institutional aid 182
grants offered to an individual at the public eligible educational 183
institutions in the state. 184
(c) Notwithstanding any provision of the general statutes, an account 185
owner may transfer money from a CHET account via any rollover 186
distribution that is not includable in federal gross income under Section 187
529 of the Internal Revenue Code. 188
Sec. 9. Section 12-743 of the general statutes is repealed and the 189
following is substituted in lieu thereof (Effective July 1, 2025): 190
(a) Any taxpayer filing a return under this chapter may contribute 191
any part of a refund under this chapter to (1) the organ transplant 192
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account established pursuant to section 17b-288, (2) the AIDS research 193
education account established pursuant to section 19a-32a, (3) the 194
endangered species, natural area preserves and watchable wildlife 195
account established pursuant to section 22a-27l, (4) the breast cancer 196
research and education account established pursuant to section 19a-32b, 197
(5) the safety net services account established pursuant to section 17b-198
112f, (6) [an individual savings plan established] a CHET account under 199
the Connecticut Higher Education Trust established pursuant to 200
sections 3-22f to 3-22p, inclusive, as amended by this act, or to the 201
[CHET Baby Scholars fund established pursuant to section 3-22u] 202
Connecticut Baby Bond Trust established pursuant to section 3-36b, or 203
(7) the mental health community investment account established 204
pursuant to section 17a-451g. Such contribution shall be made by 205
indicating on the tax return, in a manner provided for by the 206
Commissioner of Revenue Services pursuant to subsection (b) of this 207
section, the amount to be contributed to the account. 208
(b) (1) The Commissioner of Revenue Services shall revise the tax 209
return form to implement the provisions of subsection (a) of this section, 210
which form shall include spaces on the return in which taxpayers may 211
indicate their intention to make a contribution, in a whole dollar 212
amount, in accordance with this section. The commissioner shall include 213
in the instructions accompanying the tax return a description of the 214
purposes for which the accounts and funds set forth in subsection (a) of 215
this section were created. 216
(2) For purposes of facilitating the registration of a taxpayer as an 217
organ donor, the commissioner shall include information in the 218
instructions accompanying the tax return that (A) indicates the manner 219
by which a taxpayer may contact an organ donor registry organization, 220
or (B) provides electronic links to appropriate organ donor registry 221
organizations for such purpose. 222
[(3) For purposes of facilitating the participation of a taxpayer in the 223
Connecticut Higher Education Trust and the CHET Baby Scholars fund, 224
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the commissioner shall include spaces on the return, as provided in 225
subdivision (1) of this subsection as follows: (A) There shall be a space 226
indicating a taxpayer's intention to contribute any part of a refund to 227
someone known to the taxpayer who is a designated beneficiary, as 228
defined in section 3-22f, including a space for the taxpayer to provide 229
the name and Social Security number of such designated beneficiary; 230
and (B) there shall be a space indicating a taxpayer's intention to 231
contribute any part of a refund to the CHET Baby Scholars fund, 232
including a description of such fund and a statement that such 233
contribution shall not benefit a specific child. The commissioner shall 234
include information in the instructions accompanying the tax return that 235
indicates the manner by which the taxpayer may contact the 236
administrator of the Connecticut Higher Education Trust and the CHET 237
Baby Scholars fund, or provides electronic links to such administrator 238
for such purpose.] 239
(c) A designated contribution of all or part of any refund shall be 240
irrevocable upon the filing of the return and shall be made in the full 241
amount designated if the refund found due the taxpayer upon the initial 242
processing of the return, and after any deductions required by this 243
chapter, is greater than or equal to the designated contribution. If the 244
refund due, as determined upon initial processing, and after any 245
deductions required by this chapter, is less than the designated 246
contribution, the contribution shall be made in the full amount of the 247
refund. The Commissioner of Revenue Services shall subtract the 248
amount of any contribution of all or part of any refund from the amount 249
of the refund initially found due the taxpayer and shall certify the 250
difference to the Secretary of the Office of Policy and Management and 251
the Treasurer for payment to the taxpayer in accordance with this 252
chapter. For the purposes of any subsequent determination of the 253
taxpayer's net tax payment, such contribution shall be considered a part 254
of the refund paid to the taxpayer. 255
(d) Except for any funds collected for purposes of subdivision (6) of 256
subsection (a) of this section, the Commissioner of Revenue Services, 257
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after notification of and approval by the Secretary of the Office of Policy 258
and Management, may deduct and retain from the remaining funds so 259
collected an amount equal to the costs of implementing this section and 260
sections 17b-288, 19a-32a, 22a-27l, 19a-32b and 17b-112f but not to 261
exceed seven and one-half per cent of the funds contributed in any fiscal 262
year and in no event shall exceed the total cost of implementation of said 263
sections. 264
Sec. 10. Section 3-22u of the general statutes is repealed. (Effective July 265
1, 2025) 266
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2025, and
applicable to income and
taxable years commencing
on or after January 1, 2025
New section
Sec. 2 July 1, 2025 3-22f
Sec. 3 July 1, 2025 3-22h
Sec. 4 July 1, 2025 3-22i
Sec. 5 July 1, 2025 3-22k
Sec. 6 July 1, 2025 3-22m
Sec. 7 July 1, 2025 3-22o
Sec. 8 July 1, 2025 3-22p
Sec. 9 July 1, 2025 12-743
Sec. 10 July 1, 2025 Repealer section
Statement of Purpose:
To establish a tax credit for employer contributions to employees' CHET
accounts, make various changes to the Connecticut Higher Education
Trust statutes and eliminate references to the Connecticut Baby Scholars
Fund.
[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.]