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HB 5131

AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION FOR PRINCIPAL AND INTEREST PAID ON POSTSECONDARY EDUCATION LOANS.

2026 Regular Session Introduced by Pat Callahan and 2 co-sponsors

Connecticut bill creates state income tax deduction for student loan principal and interest payments to reduce borrower tax burden.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#incometaxdeductions(state) #studentloans
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Bill Summary · HB 5131

Legislative bill overview

HB 5131 proposes to create a state income tax deduction for Connecticut residents who pay principal and interest on postsecondary education loans. This would allow borrowers to deduct these loan payments directly from their taxable income, reducing their state tax liability. The bill is currently under review by the Joint Committee on Finance, Revenue and Bonding.

Why is this important

Student loan debt significantly burdens Connecticut residents, with many graduates carrying substantial obligations that affect their financial stability and economic participation. A tax deduction could provide meaningful relief to borrowers and potentially increase disposable income for loan repayment or other spending. However, the fiscal impact on state revenue and the distribution of benefits across income levels are critical policy considerations.

Potential points of contention

  • Revenue cost: The state must estimate lost tax revenue from this deduction; without offsetting measures or economic growth, this reduces funding available for other state priorities
  • Equity concerns: Tax deductions primarily benefit higher-income earners in higher tax brackets, potentially providing greater relief to college-educated, higher-earning individuals than to lower-income borrowers or those without student debt
  • Scope limitations: The bill's language doesn't clarify whether it covers all education loans (federal, private, parent loans) or specific types, and whether there are income caps or other eligibility restrictions

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

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