Student Loan Payment Tax Credit

Conn. Gen. Stat. § 12-217qq

What’s New

Amendment to tax credit for employers making student loan payments

Under prior law, the credit allowed under Conn. Gen. Stat. § 12-217qq was limited to payments made towards education loans made by the Connecticut Higher Education Supplemental Loan Authority (CHESLA). Under the new legislation, a credit can be earned by a qualified employer for making payments to any "student loan servicers" on behalf of a qualified employee. In addition, the legislation now requires employers to submit an application to the Commissioner listing the qualified employees and amounts for whom the employer will be making a payment on behalf of. Approved applications will result in the issuance of a tax credit voucher listing the amount of credit the employer is eligible to claim as a result of making such qualified payments. The legislation also caps the total amount of credits allowable under this section in any one calendar year to ten million dollars. This legislation is effective January 1, 2025, and applicable to calendar and income years commencing on or after January 1, 2025.

Description and Applicable Taxes

For calendar or income years beginning 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 the qualified employee on a student education loan that was used to finance the qualified employee’s attendance at an institution of higher education, may be eligible for a credit.

This tax credit may be applied against the taxes imposed under:

• Chapter 207 (Insurance Companies and Health Care Centers Taxes); or
• Chapter 208 (Corporation Business Tax).

Definitions

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 a student 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); 

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;

Student education loan means any loan primarily for personal use to finance education or other school-related expenses; and

Student loan servicer means any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower.

Tax Credit Amount

A tax credit 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 Apply

Complete Form CT-2025 SLP, Application for Student Loan Payment Tax Credit, to get pre-approved for eligible tax credits.

Applications may be submitted prior to payments being made on behalf of any qualified student loans.

DRS will issue Tax Credit Vouchers for all approved applications. 

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 the student loan servicer;
• A detailed schedule identifying each employee as a full time, qualified employee for the Student Loan Payment Tax Credit; and
• Tax credit voucher.

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.

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

Page Last Reviewed or Updated: March 10, 2025