Tax credit for employers making student loan payments

# (1)

“Commissioner” means the Commissioner of Revenue Services;

# (2)

“Full-time” means required to work at least thirty-five hours per week;

# (3)

“Qualified employee” means an individual who (A) is a resident of the state, (B) has earned his or her first bachelor's degree from an institution of higher education in the immediately preceding five-year period, (C) is employed full-time in the state by a qualified employer, (D) is not an owner, member or partner of such qualified employer or a family member of an owner, member or partner of such qualified employer, and (E) has received a student education loan;

# (4)

“Qualified employer” means a corporation licensed to operate a business in the state that is subject to tax under this chapter or chapter 207;

# (5)

“Qualified small business” means a qualified employer that has gross receipts of not more than five million dollars for the calendar or income year, as applicable, for which a credit under this section is allowed;

# (6)

“Student education loan” has the same meaning as provided in section 36a-846; and

# (7)

“Student loan servicer” has the same meaning as provided in section 36a-846.

(b) (1) For calendar or income years commencing on and after January 1, 2025, each qualified employer that employs a qualified employee and makes a payment directly to a student loan servicer on behalf of such qualified employee on a student education loan that was used to finance the qualified employee's attendance at an institution of higher education shall be eligible for a credit against the tax imposed under this chapter or chapter 207. Such credit shall be equal to fifty per cent of the amount of payments made to the outstanding principal balance of such loans by the qualified employer during the calendar or income year, provided (A) the credit shall not be allowed against the tax imposed under this chapter and chapter 207 for the same loan payment, and (B) the amount of credit allowed for any calendar or income year with respect to a specific qualified employee shall not exceed two thousand six hundred twenty-five dollars.

(2) A qualified employer may claim the credit under subdivision (1) of this subsection for a payment made during the part of the calendar or income year the qualified employee worked and resided in the state, provided a qualified employee who worked and resided in the state for any part of a month shall be deemed to have worked and resided in the state for the entire month for purposes of this section.

(c) (1) To claim a credit under subsection (b) of this section, an eligible qualified employer shall file an application with the commissioner in a form and manner prescribed by the commissioner. Such qualified employer shall include a list of qualified employees for whom the qualified employer will be making a payment pursuant to subsection (b) of this section, the total amount the qualified employer will pay toward such qualified employees' student education loans in the calendar or income year, the student loan servicer for each such student education loan and such other information as the commissioner may require for purposes of this section. Upon receipt of an application, the commissioner shall determine and reserve the amount of the credit the qualified employer will be entitled to claim and shall issue a voucher for such amount to the qualified employer. A qualified employer may not claim for any calendar or income year more than the amount set forth in such voucher.

(2) The aggregate amount of tax credits that may be reserved by the commissioner under this section shall not exceed ten million dollars in any one calendar or income year and credits shall be reserved in the order of applications received by the commissioner.

(3) A qualified employer that claims the credit under subsection (b) of this section shall provide any documentation required by the commissioner in a form and manner prescribed by the commissioner.

(d) (1) A qualified small business may apply to the commissioner in accordance with the provisions of subdivision (2) of this subsection to exchange any credit allowed under subsection (b) of this section for a credit refund equal to the value of the credit. Any amount of credit refunded under this subsection shall be refunded to the qualified small business in accordance with the provisions of this chapter or chapter 207, as applicable. No interest shall be allowed or paid on any amount of credit refunded under this subsection. Any amount of credit refunded under this subsection shall be subject to the provisions of section 12-39g.

(2) Each application for a credit refund under this subsection shall be filed, on such forms and containing such information as prescribed by the commissioner, on or before the original due date of the return prescribed under section 12-205 or 12-222, as applicable, for the calendar or income year for which such credit was earned or, if applicable, the extended due date of such year's return. No application for a credit refund under this subsection may be filed after the due date or extended due date, as the case may be, of such return.

(3) A qualified small business may not exchange for any calendar or income year more than the amount of the credit set forth in the voucher issued by the commissioner pursuant to subsection (c) of this section.

(P.A. 19-86, S. 1; P.A. 22-118, S. 419; P.A. 24-52, S. 1; 24-151, S. 94.)

History: P.A. 19-86 effective January 1, 2022, and applicable to income years commencing on or after January 1, 2022; P.A. 22-118 amended Subsec. (a) by adding new Subdiv. (2) defining “commissioner”, redesignating existing Subdivs. (2) to (5) as Subdivs. (3) to (6), redefining “eligible education loan” in redesignated Subdiv. (3), deleting former Subdiv. (6) re definition of “student loan” and adding Subdiv. (7) defining “qualified small business”, amended Subsec. (b) by replacing “payment directly to the authority on an eligible education loan on behalf of such qualified employee” with “payment directly to the authority on behalf of such qualified employee on an eligible education loan that was used to finance the qualified employee's attendance at an institution of higher education” in Subdiv. (1) and adding references to calendar year, amended Subsec. (c) by making a technical change, and added Subsec. (d) re application by qualified small business to exchange credit for credit refund, effective May 7, 2022, and applicable to calendar and income years commencing on or after January 1, 2022; P.A. 24-52 amended Subsec. (a) by deleting former Subdivs. (1) and (3) re definitions of “authority” and “eligible education loan”, respectively, redesignating existing Subdivs. (2) and (4) to (7) as Subdivs. (1) and (2) to (5) and adding new Subdivs. (6) and (7) defining “student education loan” and “student loan servicer”, respectively, amended Subsec. (b) by replacing payment directly to “the authority” with “a student loan servicer” and making technical changes, added new Subsec. (c) re filing an application to claim a credit and an aggregate cap of $10,000,000, redesignated existing Subsec. (c) as Subsec. (c)(3) and added Subsec. (d)(3) re not exchanging more than the amount of the credit, effective January 1, 2025, and applicable to calendar and income years commencing on or after January 1, 2025; P.A. 24-151 amended Subsec. (d)(1) by replacing “section 12-39h” with “section 12-39g”.