Substitute Senate Bill No. 513 establishes a voluntary payroll tax program in Connecticut, effective January 1, 2027, targeting employees earning above $50,000 (or $80,000 for head of household filers). The bill defines key terms such as "employer," "payroll expense," and "covered employee," and allows these employees to opt into the program, which includes a payroll expense reduction and a refundable tax credit against state income tax based on the payroll tax paid by their employers. Employers are mandated to pay a payroll tax according to a tiered rate schedule based on employee income and contribute to a qualifying retirement plan for each electing employee. The bill also introduces an "administrative efficiency account" to manage the funds generated from the payroll tax, aimed at reducing public benefits charges on electric bills.

Additionally, the bill amends existing statutes, changing the fiscal year for recording tax revenue from June 30, 1992, to June 30, 2027, and includes provisions for the Comptroller to record tax revenue shortly after the fiscal year ends. It outlines the withholding requirements for various distributions and allows the Commissioner of Revenue Services to adopt regulations for withholding from non-employer payments. The bill also includes a one-time implementation cost of up to $15 million for system development and ongoing annual costs of approximately $1.8 million for new positions related to the program's administration. Overall, the legislation aims to streamline tax collection while providing financial benefits to employees and reducing costs associated with public benefits.

Statutes affected:
Raised Bill: 3-114h
FIN Joint Favorable: 3-114h
File No. 698: 3-114h