Car Tax Fix Fails After Last-Minute Amendment

Legislation designed to address implementation issues with commercial motor vehicle taxes failed following a last-minute amendment.

The last-minute amendment passed by the Senate on HB 5172 allowed towns to eliminate the car tax by shifting the burden to real and commercial property.

The amendment also permitted localities to set their own assessment rates on real and personal property instead of using the uniform statewide rate of 70% of appraised value.

This troublesome provision would allow municipalities to tax residential and commercial properties at different rates, as the City of Hartford currently does.

The underlying bill, HB 5172, which CBIA supported along with the Connecticut Conference of Municipalities and the Connecticut Council of Small Towns, corrected implementation issues in Public Act 22-118.

The underlying bill allows assessment of motor vehicles at a set depreciation schedule based on the vehicle’s MSRP value rather than the variable yearly Blue Book value set by the Office of Policy and Management, providing individuals and businesses with a predictable tax rate.

The last-minute Senate amendment to the bill that potentially eliminated the car tax led to the House not reconsidering the amended bill prior to the end of session.

Tax Rate Changes

The problematic sections of PA 22-118 will now take effect on Oct. 1, 2024.

Municipalities will have the ability to tax certain commercial vehicles at the personal property tax rate rather than the currently capped car tax mill rate.

If applied by a town’s assessor, this change will increase the tax rate on commercial motor vehicles.

Given there was no action taken to fix PA 22-118 this session, there is a potential battle ahead for municipalities if their assessor determines that the personal property rate should apply to certain commercial vehicles. 

“We applaud the hard work put in by OPM, CCM, COST, and Planning and Development Committee leadership over the past two years to try to address the issues with PA 22-118,” CBIA’s Chris Davis said.

“We share in their disappointment that this bipartisan proposal could not get final approval in both chambers before the end of the regular legislative session.”

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For more information, contact CBIA’s Pete Myers (860.244.1921).