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HB 5604

AN ACT ELIMINATING THE LABOR CONSULTANT TAX DEDUCTION.

2025 Regular Session Introduced by Nick Gauthier

Connecticut bill eliminates the state tax deduction for business labor consultant expenses, increasing taxes on companies using external HR and recruiting services.

CHG. REF., SEN. TO COMM. ON Finance, Revenue and Bonding
#incometax(state)
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Bill Summary · HB 5604

Legislative bill overview

HB 5604 would eliminate Connecticut's tax deduction for labor consultant expenses. Currently, businesses can deduct costs associated with hiring labor consultants from their state taxable income. This bill removes that deduction entirely, effectively increasing the tax burden on businesses that employ labor consultants.

Why is this important

The change would increase state tax revenue from affected businesses while potentially raising costs for companies that rely on labor consultants for HR services, recruitment, training, or compliance work. This could impact small businesses and larger enterprises differently depending on their reliance on external labor consulting services.

Potential points of contention

  • Business cost impact: Opponents argue removing the deduction increases operating costs for businesses already struggling with expenses, potentially discouraging hiring or consulting investments
  • Revenue motivation unclear: The bill's stated purpose for elimination isn't explicit—it's unclear if this targets specific consultant practices or simply seeks revenue; lack of justification may suggest it's a general revenue-raising measure
  • Definitional ambiguity: "Labor consultant" services vary widely (recruiters, HR firms, compliance advisors); the bill doesn't clarify scope, potentially creating confusion about what qualifies as a non-deductible expense

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

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