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HB 5032

AN ACT ESTABLISHING A CREDIT AGAINST THE PERSONAL INCOME TAX FOR INTEREST PAID ON STUDENT LOANS.

2025 Regular Session Introduced by Devin Carney

Connecticut bill proposes income tax credit for student loan interest payments to reduce tax burden on borrowers managing education debt.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#incometaxcredits(state) #interest #studentloans
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Bill Summary · HB 5032

Legislative bill overview

HB 5032 would allow Connecticut residents to claim a tax credit against their state personal income tax for interest they paid on student loans during the tax year. This credit would reduce the amount of state income tax owed by eligible taxpayers with student loan debt.

Why is this important

Student loan debt has become a significant financial burden for millions of Americans, including Connecticut residents. A tax credit could provide meaningful relief to borrowers struggling with loan repayment, potentially freeing up resources for other economic activity or debt reduction. However, the actual impact depends on critical details not yet specified—such as credit amount, income limits, and eligibility requirements.

Potential points of contention

  • Revenue impact and cost: The state legislature will need to determine whether lost tax revenue from the credit is sustainable and how it compares to other budget priorities
  • Equity and targeting: Questions about whether the credit should be limited to lower-income borrowers or available to all earners, and whether it benefits those who can already afford loans more than those struggling most
  • Scope and structure: Disagreement likely over whether the credit applies to all student loans (federal, private, parent PLUS loans) and whether it mirrors the existing federal student loan interest deduction or takes a different approach

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

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