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 bill outlines the administrative framework for the tax, stating that the municipality's legislative body must vote to impose the tax and determine its payment structure, whether as a single installment or in two semiannual installments. The local tax collector will administer the tax, with necessary forms prescribed by the Commissioner of Revenue Services, who may also adopt regulations for enforcement. The effective date of the bill is set for October 1, 2025, and it will apply to taxable years commencing on or after January 1, 2026.