SB 1554 Connecticut Senate · 2025 Regular Session

AN ACT CONCERNING THE ELIMINATION OF THE PROPERTY TAX ON MOTOR VEHICLES AND THE PROVISION OF REIMBURSEMENT AND OTHER GRANTS TO MUNICIPALITIES.

SB 1554 eliminates Connecticut's property tax on motor vehicles through a phased approach, beginning in the 2028-2029 fiscal year by gradually exempting portions of vehicle assessed value until the tax is fully removed. Municipalities affected by lost revenue from this tax elimination will receive annual reimbursement grants calculated from state savings in retirement fund contributions. After the tax ends, remaining funds will be distributed as needs-based grants (using a 2015 study metric) and per capita payments to municipalities. The bill requires annual reports to the legislature detailing grant distributions and fiscal impacts.

Issues: ✓ Budget & Taxes

Sub-Topics: Property Tax

Bill status in committee 1 of 4 stages cleared

Introduction

Apr 2025

Committee Review

Floor Vote

Governor

Introduced Apr 9, 2025 Last action May 12, 2025

Maddy AI version diff · 1 comparison

What changed between versions

Raised Bill → FIN Joint Favorable Substitute · 5 edits

MODERATE

The bill was revised to change how funding is collected and structured for phasing out property taxes on motor vehicles. The original version relied on personal income tax and business entity tax revenue differences, while the substitute version ties funding to actuarial savings in state pension systems. The account structure was reorganized, with the municipal offset vehicle expense account now established under subsection (b) instead of (c), and the Secretary of the Office of Policy and Management's responsibilities were expanded to include calculating a municipal needs capacity gap metric.

Scope change

The bill's funding mechanism shifted from general tax revenue differences to pension system actuarial savings, and the implementation timeline for property tax exemptions remains the same (starting fiscal year 2029).

FISCAL

Funding source changed from personal income tax and business entity tax revenue differences to actuarial savings in state employees and teachers' retirement systems.

REQUIREMENT

The municipal offset vehicle expense account was renumbered from subsection (c) to subsection (b), and its purpose was clarified to include disbursing grants for revenue loss from the property tax phase-out.

New requirement for the Secretary to calculate and post a municipal needs capacity gap metric for each municipality on the Office of Policy and Management's website.

Grant distribution formula was modified to include a per capita basis distribution in addition to the needs capacity gap metric distribution.

TIMELINE

Notification deadlines for municipalities were adjusted, with the initial notification deadline moved from September 1, 2027 to November 1 following the October 15 calculation deadline.

Floor votes

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Full legislative history

Actions timeline

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Key actions

Committee

Apr 24, 2025

Upper · Passed

Joint Favorable Substitute

upper

Apr 9, 2025

Committee

REF. TO JOINT COMM. ON Finance, Revenue and Bonding

upper

1 primary · 0 co-sponsors