The proposed bill authorizes municipalities to impose a tax on the net investment income of certain private nonprofit institutions of higher education, specifically those with assets exceeding $300 million. This tax can only be levied if more than 50% of the institution's students attend classes at the main campus located within the municipality. The tax rate is capped at 2% of the institution's net investment income for each taxable year. Notably, the bill excludes certain institutions with special act charters, such as Trinity College, Wesleyan University, and Yale College, from being taxed.

The administration of this tax will be managed by the local tax collector, with necessary forms prescribed by the Commissioner of Revenue Services. The bill also clarifies that the tax can be paid in a single installment or in two semiannual installments, as determined by the municipality's legislative body. The effective date for this tax is set for October 1, 2025, and it will apply to taxable years commencing on or after January 1, 2026. The bill aims to provide municipalities with a potential revenue source while ensuring that the tax administration aligns with existing regulations.