Student Loan Payment Tax Credit

Conn. Gen. Stat. § 12-217qq

Description and Applicable Taxes

The Student Loan Payment Tax Credit may be claimed by each qualified employer that employs a qualified employee and makes a payment directly to the Connecticut Higher Education Supplemental Loan Authority (CHESLA) for education loans on behalf of such qualified employee. This tax credit may be claimed against the taxes imposed under Chapter 207 (Insurance Companies and Health Care Centers Taxes) or Chapter 208 (Corporation Business Tax).

Definitions

Authority means the Connecticut Higher Education Supplemental Loan Authority (CHESLA);

Eligible education loan means an authority loan, as defined in Conn. Gen. Stat. § 10a-223, that is in repayment;

Full-time means that the qualified employee is required to work at least thirty-five hours per week;

Gross Receipts means gross receipts as defined by the Internal Revenue Code, are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses;

Qualified employee means an individual who:

• Is a resident of the state;
• Has earned his or her first bachelor's degree from an institution of higher education in the immediately preceding five-year period;
• Is employed full-time in the state by a qualified employer;
• 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
• Has received an eligible education loan.

Qualified employer means a corporation licensed to operate a business in the state that is subject to tax under Chapter 207 (Insurance Companies and Health Care Centers Taxes) or Chapter 208 (Corporation Business Tax); and

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.

Tax Credit Amount

A tax credit is allowed in an amount equal to 50% of the amount of payments made to the outstanding principal balance of such loans by the qualified employer during the income year, provided:

• The credit shall not be allowed against the taxes imposed under Chapter 207 or Chapter 208 for the same loan payment; and
• The amount of credit allowed for any income year with respect to a specific qualified employee shall not exceed $2,625.

A qualified employer may claim the credit for a payment made during the part of the 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.

Carryforward and Carryback Limitations

No carryforward or carryback is allowed.

How to Claim the Tax Credit

Complete Form CT-SLP, Student Loan Payment Tax Credit, to claim the credit, along with the following attachments:

• Proof of payment to Connecticut Higher Education Supplemental Loan Authority (CHESLA); and
• A detailed schedule identifying each employee as a full time, qualified employee for the Student Loan Payment Tax Credit.

Refund of Student Loan Payment Tax Credits by a Qualified Small Business

Certain small businesses can elect to have such credit issued in the form of refund.

Use Form CT-RSLP, Application for Refund of Student Loan Payment Tax Credits by a Qualified Small Business, to request a refund for the Student Loan Payment tax credit. If the total gross receipts of the company for the current income year exceeds five million dollars, the company is not eligible for a refund of tax credits.

Student Loan Repayment Tax Credit - Commissioner Letter

Commissioner - Student Loan Letter

Student Loan Payment Tax Credit Form:

https://portal.ct.gov/-/media/DRS/Forms/2022/Corporation/CT-RSLP_1222.pdf

Additional DRS guidance:

SN 2022(5), 2022 Legislative Changes Affecting the Corporation Business Tax

CHESLA Resources:

https://ctstudentloanpaydown.com/

https://www.chesla.org/sites/default/files/CTState_TaxCredit_FactSheet_V6.pdf 

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Revenue Services
450 Columbus Boulevard
Hartford CT 06103
1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only), or
860-297-5962 (from anywhere)

Statutory and Regulatory References

Conn. Gen. Stat. § 12-217qq