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SB 789

AN ACT CONCERNING AN OPTIONAL PAYROLL EXPENSE TAX.

2025 Regular Session Introduced by Paul Honig

Connecticut proposes optional payroll tax allowing businesses to select participation, potentially affecting tax competitiveness and state revenue predictability.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#payrolltax
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Bill Summary · SB 789

Legislative bill overview

SB 789 proposes an optional payroll expense tax in Connecticut, allowing businesses to choose whether to pay this tax instead of or in addition to existing tax obligations. The bill was introduced by Senator Paul Honig and is currently under review by the Joint Committee on Finance, Revenue and Bonding as of January 2025.

Why is this important

Payroll taxes directly affect business operating costs and employee compensation structures, making this a significant economic policy decision. Connecticut's tax competitiveness relative to neighboring states influences business location decisions and job creation, making any payroll tax modification consequential for the state's economic development strategy.

Potential points of contention

  • Definition of "optional": Unclear whether this allows businesses to elect out of existing payroll taxes or is a supplemental voluntary tax, creating potential inequities between participating and non-participating businesses
  • Revenue predictability: Optional tax systems create budgeting uncertainty for the state, complicating long-term fiscal planning and service funding
  • Competitive disadvantage concerns: Businesses may worry that opting in creates cost disadvantages versus competitors who don't participate, or debate whether the tax burden is fairly distributed across industries

Compiled from official sources — confirm details with the bill’s official record.

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