Substitute House Bill No. 6884 seeks to enhance tax credits for employers making student loan payments on behalf of qualified employees by expanding eligibility to include all employers subject to tax under Chapter 229. The bill modifies Section 12-217qq of the general statutes, effective January 1, 2026, and introduces several key changes, such as replacing the term "corporation" with "taxpayer" in the definition of a "qualified employer." Additionally, the language has been updated for gender neutrality, changing "his or her" to "such individual's." The bill allows qualified employers to claim a tax credit of 50% of the payments made towards the principal balance of student loans, capped at $2,625 per employee per taxable year, and establishes a process for applying for these credits.

Furthermore, the bill broadens the scope of eligible entities to include shareholders or partners of S corporations, entities treated as partnerships, and owners of single-member LLCs, while clarifying that the credit does not apply to withheld employee taxes. The cap on total credits is adjusted from a calendar year to a fiscal year basis, maintaining the limit at $10 million. The fiscal implications include a potential annual revenue loss of up to $10 million starting in FY 27 and a one-time cost of up to $175,000 for the Department of Revenue Services for necessary programming updates.

Statutes affected:
Raised Bill: 12-217qq
HED Joint Favorable Substitute Change of Reference: 12-217qq
FIN Joint Favorable: 12-217qq
File No. 883: 12-217qq