CT SB01239

Companies offering employee stock-sharing plans to at least 80% of eligible employees (full-time, U.S.-based workers excluding top 1% earners) may claim exemptions from additional taxes under Connecticut General Statutes chapters 12-214 and 12-219, effective for income years beginning January 1, 2026.

Stock distributions must be made without compensation other than service, in equal amounts to participating employees, with holding periods not exceeding 3 years (except for hardship withdrawals), and must vest immediately or within 5 years of employment.

At least some eligible employees who are Connecticut residents must participate in the plan for it to qualify for tax benefits.

Stock received by participating employees is not considered income for Connecticut income tax purposes, and gains from stock dispositions offset by eligible expenses (education loan payments, uninsured medical care, principal residence debt) are excluded from taxable income.

The act takes effect January 1, 2024.