Connecticut SB 513: AN ACT CONCERNING A PAYROLL TAX AND STRUCTURAL EFFICIENCY IN THE COLLECTION OF SUCH TAX AND ESTABLISHING AN ADMINISTRATIVE EFFICIENCY ACCOUNT FOR THE REDUCTION OF CERTAIN CONSUMER CHARGES.

Bill Text

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General Assembly  
Substitute Bill No. 513  
February Session, 2026 
 
 
 
 
AN ACT CONCERNING A PAYROLL TAX AND STRUCTURAL 
EFFICIENCY IN THE COLLECTION OF SUCH TAX AND 
ESTABLISHING AN ADMINISTRATIVE EFFICIENCY ACCOUNT FOR 
THE REDUCTION OF CERTAIN CONSUMER CHARGES.  
Be  it  enacted  by  the  Senate  and  House  of  Representatives  in  General 
Assembly convened: 
 
Section 1. (NEW) (Effective from passage) (a) As used in this section: 1 
(1) "Employer" means an employer required to deduct and withhold 2 
tax from  wages  pursuant  to  subparagraph  (A)  of  subdivision  (1)  of 3 
subsection (a) of section 12-705 of the general statutes, as amended by 4 
this  act.  "Employer"  does  not  include  the  federal  government  or  any 5 
tribal government; 6 
(2) "Payroll expense" means (A) wages, as defined in Section 3121 of 7 
the  Internal  Revenue  Code  of  1986,  or  any  subsequent  corresponding 8 
internal  revenue  code  of  the  United  States,  as  amended  from  time  to 9 
time,   without   regard   to   Section   3121(a)(1)   of   said   code,   and   (B) 10 
compensation, as defined in Section 3231 of said code, without regard 11 
to  Section  3231(e)(2)(A)(i)  of  said  code,  that  are  paid  to  all  covered 12 
employees; 13 
(3) "Covered employee" means an employee of an employer, who is 14 
employed in the state, required to have amounts withheld from wages 15 
pursuant  to  subparagraph  (A)  of  subdivision  (1)  of  subsection  (a)  of 16 
section  12-705  of  the  general  statutes,  as  amended  by  this  act,  and 17 

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receives an annual gross income from wages and compensation of more 18 
than (A) fifty thousand dollars for a person who files a return under the 19 
federal  income  tax  for  the  taxable  year  as  other  than  a  head  of 20 
household, or (B) eighty thousand dollars for a person who files a return 21 
under the federal income tax for the taxable year as a head of household. 22 
"Covered  employee"  includes  an  employee  who  is  a  member  of  an 23 
employee   organization   who   has    provided   certification   from   a 24 
representative  of  such  employee  organization  that  nothing  in  the 25 
applicable  collective  bargaining  agreement  prohibits  such  employee 26 
from  electing  to  receive  a  reduction  in  payroll  expense  in  accordance 27 
with the provisions of this section; 28 
(4)  "Electing  covered  employee"  means  a  covered  employee  who 29 
elects to participate in the payroll tax program pursuant to this section; 30 
and 31 
(5)  "Employee  organization"  means any  lawful  association,  labor 32 
organization,  federation  or  council  having  as  a  primary  purpose  the 33 
improvement  of  wages,  hours  and  other  conditions  of  employment 34 
among employees. 35 
(b)  There  is  established,  for  taxable  years  commencing  on  or  after 36 
January  1,  2027,  a  payroll  tax  program  under  which  (1)  any  covered 37 
employee  may  elect  to  participate  in  such  program  by  agreeing  to  a 38 
payroll expense reduction calculated in accordance with the provisions 39 
of subsection (c) of this section, and who shall be allowed a credit against 40 
the  tax  imposed  under  chapter  229  of  the  general  statutes,  and  (2)  the 41 
employer of the electing covered employee shall pay (A) a payroll tax in 42 
accordance with the provisions of subsection (d) of this section, and (B) 43 
the additional amount set forth in subsection (f) of this section for each 44 
electing covered employee. 45 
(c)  (1) For  the  purposes  of  this  subsection,  "E"  means  the  Social 46 
Security tax  rate  of the  employee  contribution,  "O"  means  the  electing 47 
covered employee's payroll expense amount prior to application of the 48 
calculation under this subsection, "P" means the applicable payroll tax 49 

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rate  and  "S"  means  the  maximum  taxable  earnings  threshold  for  the 50 
Social Security tax. 51 
(2)  The  amount  to  which  an  electing  covered  employee's  payroll 52 
expense  shall  be  reduced  shall  be  equal  to  the  product  of  (A)  one 53 
hundred per cent minus P, (B) multiplied by the sum of (i) the product 54 
of  O  multiplied  by  P  (ii)  plus  the  product  of  E  multiplied  by  the 55 
maximum of zero and the minimum of (I) the sum of S plus negative O 56 
plus the product of O multiplied by P, and (II) the product of O times P, 57 
provided  if  the  amount  calculated  under  subparagraph  (B)(ii)  of  this 58 
subdivision  is  less  than  zero,  such  amount  shall  be  disregarded  for 59 
purposes of determining the reduction under this subdivision. 60 
(3) Such  reduction  shall  apply  only  once  at  the  time  of  an  electing 61 
covered  employee's  initial  participation  in  the  payroll  tax  program.  A 62 
reelection  to  participate  in  the  progra