Substitute House Bill No. 6884 seeks to enhance tax credits for employers making student loan payments on behalf of their employees. The bill modifies Section 12-217qq of the general statutes, effective January 1, 2026, and introduces several key changes. Notably, it replaces the term "corporation" with "taxpayer" in the definition of a "qualified employer" and expands eligibility for tax credits to include employers subject to tax under Chapter 229, in addition to Chapter 207. The definition of "qualified employee" has also been updated to use gender-neutral language.

Under the new provisions, qualified employers can receive a tax credit equal to 50% of the payments made towards the principal balance of student loans, with a maximum credit of $2,625 per employee per taxable year. The bill allows various business structures, including S corporations and single-member LLCs, to claim the credit, while excluding taxes withheld for employees. It also shifts the cap on total credits from a calendar year to a fiscal year basis, maintaining the limit at $10 million. Additionally, a one-time cost of up to $175,000 is allocated for the Department of Revenue Services to update its systems, with a projected annual revenue loss of up to $10 million starting in FY 27.

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