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HB 5968

AN ACT CONCERNING WORLD-WIDE COMBINED REPORTING FOR CORPORATE TAX LIABILITY PURPOSES.

2025 Regular Session Introduced by Josh Elliott and 1 co-sponsor

Connecticut would tax corporations' global income using combined reporting and formulary apportionment to determine state tax liability.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#corporateannualreports #corporationbusinesstax
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Bill Summary · HB 5968

Legislative bill overview

HB 5968 proposes implementing worldwide combined reporting for corporate tax liability in Connecticut. This means corporations operating both in-state and internationally would calculate their Connecticut tax based on their total global income and property, with Connecticut's share determined by a formulary apportionment method. The bill would change Connecticut's current system, which typically taxes only Connecticut-source income.

Why is this important

Worldwide combined reporting could significantly increase corporate tax revenue for Connecticut by capturing income that multinational corporations currently shift to lower-tax jurisdictions. However, it also affects how multinational businesses operating in Connecticut calculate their state tax obligations and could influence business location decisions. This represents a major structural change to Connecticut's corporate tax system that would have substantial fiscal and competitive implications.

Potential points of contention

  • Interstate/international competitiveness: Corporations may argue the system disadvantages Connecticut businesses compared to states using different apportionment methods, potentially affecting investment and job growth decisions
  • Complexity and compliance costs: Multinational corporations would face significantly increased reporting and accounting complexity, which they argue increases administrative burden and costs, particularly for smaller multi-state operations
  • Constitutional concerns: Some may challenge whether Connecticut can legally tax worldwide income of corporations not wholly based there, raising dormant Commerce Clause and due process questions that have affected similar state initiatives

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

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