Bill Tracker
Keep pace with the latest legislative developments. Easily search bills that impact your business, from taxes and state spending to the environment and labor.
HB 7275 an act concerning the regulation of cigarettes, tobacco products, electronic nicotine delivery systems and vapor products
Modifies the definition of “cigarettes” subject to the state’s cigarette tax to (1) align it with the definition used for purposes of the state’s master settlement agreement with tobacco companies and (2) expand it to include any roll, stick, or capsule of tobacco intended to be heated under ordinary conditions of use by expanding the definition of cigarette, the bill potentially expands the (1) types of products subject to the state’s cigarette tax and (2) distributors and manufacturers subject to the existing laws and restrictions on selling cigarettes in Connecticut (e.g., licensing and escrow account requirements); extends to tobacco products the existing restrictions on shipping and transporting cigarettes in the state and the related penalties for violating these requirements; makes violations of these shipping and transporting requirements for both cigarettes and tobacco products an unfair trade practice under CUTPA;exempts from the shipping and transporting restrictions shipments of certain premium cigars; under the bill, shipments of these premium cigars are subject the same shipping and age verification requirements currently required for cigarette shipments; imposes similar restrictions and penalties on shipping and transporting e-cigarettes and vapor products (specifically, makes first violations of these requirements a class B misdemeanor and subsequent violations a class A misdemeanor); increases the maximum fines that may be imposed on someone who sells, gives, or delivers e-cigarettes or vapor products to individuals under age 21 to $1,000 for each offense, rather than the current maximum of $300 for a first offense, $750 for a second offense, and $1,000 for each subsequent offense; and requires sellers of e-cigarettes or vapor products to ask that each person intending to purchase these products to present a driver’s license, passport, or identity card to verify that they are at least 21 years old.
HB 7287 the state budget for the biennium ending june 30, 2027, and making appropriations therefor, and provisions related to revenue and other items implementing the state budget
This is the state budget bill. Here are some of the tax implications included in the budget.
Unitary Tax Cap Eliminated. Starting with the 2025 income year, the budget bill eliminates the $2.5 million cap on the amount a combined group’s tax, calculated on a combined unitary basis, can exceed the tax it would have paid on a its nexus combined base tax.This significant change will cost affected businesses a total of $133.1 million in fiscal year 2026 and $83.2 million in fiscal year 2027. The bill also requires the increase in valuation allowance to be calculated based on the change reported in the combined group’s financial statements for the 2015 income year, rather than 2016 income year as current law requires.
Alternative NOL Rule Eliminated. The combined unitary reporting law passed in 2015 allowed combined groups with over $6 billion in net operating losses (NOLs) from pre-2013 tax years to make a special election during the 2015 income year to give up 50% of their pre-2015 losses in exchange for using the remaining loss carry over to reduce their tax by up to $2.5 million in any income year moving forward. The budget bill sunsets this alternative NOL rule and instead requires these groups to recalculate their remaining loss carry over on their 2025 income year return as if they had not been required to give up 50% of their pre-2015 losses to make this election. This change will cost affected businesses a total of $8.3 million annually.
Corporate Tax Surcharge Extended. The budget bill extends the 10% corporation business tax surcharge for three additional years, to the 2026 through 2028 income years. Under current law, the surcharge expires after the 2025 income year. The surcharge applies to companies that have more than $250 in corporation tax liability and either have at least $100 million in annual gross income in those years or are taxable members of a combined group that files a combined unitary return, regardless of the amount of annual gross income. These companies must calculate their surcharges based on their tax liability, excluding any credits. This extension will cost affected businesses a total of $48 million dollars in fiscal year 2026 and $80 million in fiscal year 2027.
Hospital Tax Changes. The budget bill rebases hospital tax calculations resulting in a significant increase in the hospital taxes.
Telecommunications and Telephone Subscriber Fee. The bill requires each telephone and telecommunications company providing local telephone service and each provider of commercial mobile radio services such as cell phones and pagers and voice over Internet protocol (VOIP) services to charge each subscriber a new fee of five cents per month per service line unless the subscriber opts out of the fee. This new fee results in an estimated revenue gain to the Firefighters Cancer Relief Account of up to $1.5 million in FY 26 and up to $3.0 million in FY 27.
Bioscience R&D Tax Credit Increased. The budget bill increases the cash refund a qualifying small biotechnology company may receive for research and development and research and experimental tax credits from 65% to 90% of the credit amount. The refund is capped at $1.5 million per company for each income year, and a qualified small business may carry its unused credits forward instead of applying for a cash refund. This change will save affected businesses a total of $1.8 million annually.
Income Tax Credit for Family Home Child Care Providers Established. The bill establishes a refundable income tax credit for taxpayers who own a state-licensed family child care home. The credit equals $500 and applies against the personal income tax of the owner of the family home child care operation. This change saves these affected small business owners $900,000 a year.
Farm Investment Tax Credit Established. The budget bill creates a 20% refundable business tax credit for farmers’ investments in eligible machinery, equipment, and buildings. This will save farm operators $2.5 million annually.
CHET Employer Contribution Tax Credit Established. The budget bill establishes a new business tax credit for contributions employers make to a qualifying employee’s Connecticut Higher Education Trust (CHET) account equal to 25% of the employer’s contribution and is capped at $500 per employee per income or tax year. It is anticipated that this credit will save eligible employers $400,000 annually.
UCONN Tax Credit Incentive Program. The budget bill creates a tax credit for the amounts people, businesses, or entities paid to UConn according to a written agreement with the university under a newly established tax credit incentive program to promote and publicly recognize the university and its programs, services, and mission. The credit equals 50% of the payments made for the tax or income year, as applicable, and is capped at $500,000 per taxpayer for each tax or income year. The bill caps the total credits allowed for each calendar year at $5 million.
Aircraft Industry Joint Venture Sales Tax Exemption Extended. The budget bill extends from 40 to 50 consecutive years the duration of the sales tax exemption for specified business services rendered between participants in certain kinds of joint ventures in the aircraft industry that existed before January 1, 1986.
Dues Tax Exemption Expanded. The budget bill increases the threshold for exempting annual dues and initiation fees from the state’s 10% dues tax from $100 to $250. This change saves affected entities a total of $300,000 annually.
Earned Income Tax Credit Increase. The budget bill increases the earned income tax credit’s amount by $250 for eligible taxpayers with at least one qualifying child for federal income tax purposes. This results in an annual revenue reduction of $35.5 million.
Income Tax Withholding on Certain Retirement Income Distributions. The budget bill temporarily suspends the income tax withholding requirement on lump sum distributions from pensions, annuities, and other specified sources, from July 1, 2025, through December 31, 2026. The bill does still require retirement plan servicers to withhold taxes from these distributions if the payee has requested it.
DRS Tax Incidence Report Changes. Starting with the tax incidence report due in 2025, the budget bill limits from every two years to every four years the frequency with which the report must include incidence projections for the property tax and any other tax that generated $100 million or more in the fiscal year before the report’s submission.As under current law, each biennial report must continue to include projections of the income tax, pass-through entity tax, sales and excise taxes, and corporation business tax.
DRS Tax Gap Report Changes. The budget bill delays the next required tax gap report by one year, from December 15, 2025, to December 15, 2026, and requires DRS to submit subsequent reports every two years, rather than annually.
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