Food & Medication Tax

This first tax is being proposed by (or to, depending on how you look at the situation) Gov. Ned Lamont is the grocery tax. This tax is actually being led by the Commission on Fiscal Stability and Economic Growth , which is headed up by some major names (CEO of Webster Hank, CEO of Stanley Black & Decker, CEO of The Hartford, etc.) While this bill hasn't been handed in (expect it at the end of February) the most likely proposal will be a 2% tax on groceries and medicine. As part of this plan, Gov. Ned Lamont seems to be aiming to cut the sales tax rate down from 6.35%, while adding an additional tax on top of consumer foods and medicine.

Of course, the end tax rate could be higher than suggested, and it may climb all the way into the 6.35% range. Either way, grocery taxes are on the horizon. Whether this will impact Connecticut's budget deficit is unclear, but what's completely clear is that it will impact CT citizens' wallets.

There's some friction with this bill, and talk of the new tax seems to be followed by confusing dialog across Connecticut's political landscape. In fact, Gov. Ned Lamont told CT Post that the bill was not "in the top 50" of his preferred tax solutions. We'll all know in a few months whether or not we're going to be paying an additional tax on medicine and groceries.

Ammunition Tax

Another sales tax that could be on the horizon is the "sin tax" ( House Bill (HB) 5700 ) that aims to 50% tax to all ammunition in the state. This is undoubtedly a widely debated tax, and issues of gun ownership and constitutional rights are inevitably going to play into whether or not the bill makes it into law.

But, as of now, the bill is still making rounds. If it passes, we expect to see a lengthy debate in the Supreme Court of legality before it either fails or is instituted state-wide. The bill is currently being pushed by state representative Jillian Gilchrest in the Connecticut State House of Representatives. Simultaneously, state representative Will Haskell has produced a companion bill in the Connecticut State Senate.

SALT Tax

This tax bill isn't on the horizon; it's already enacted. The Tax Cuts and Jobs Act now caps the deductibility of state and property taxes at $10,000. Last year, 484,000 CT citizens took paid over $10,000 in property taxes, which means that these people will now be unable to claim those post-$10,000 deductibles.

If you're in this camp of Connecticut residents who was paying over $10,000 in property taxes, you should expect to see the impact on your tax return. Contact Wayne at 860-628-4995 to set up an appointment with us. We'll help you adjust to these lower deductibles and see if we can find you additional deductible avenues to make up for the loss.

Who will this impact?

Generally, those who pay over $10,000 in property taxes make over $150,000 annually. This new act will also disproportionately impact two-income households.

This is certainly an area where you need to consult your tax team, especially if you pay over $10,000 a year on property and state taxes.

Car Tolls

Another bill in the political pipeline involves tolls for drivers. While this bill was initially proposed as a tax on large trucks only, current reports suggest that Gov. Ned Lamont is looking at tolls involving all cars on the road. These electronic tolling booths could impact all drivers by charging a small fee for road travel, which would be funneled back into state road infrastructure.

As it stands, the governor is looking this proposal over and may tack it to his list of tax objectives for the year. We'll keep you updated on any movement in this area.

Transportation taxation is a big item on the governor's agenda. This bill could be part of that agenda.

Online Sales Tax

Like the SALT tax, this tax bill has already passed and is currently in effect since the beginning of December. Online marketplaces (Amazon, eBay, etc.) will now charge customers state tax rates on all goods. This tax nexus will certainly help the Connecticut deficit but may have an adverse impact on some consumers who rely on online shopping. In a sense, this will raise the price of online good by 6.35%.

Connecticut isn't the first state to pass these laws. Alabama, Arizona, Iowa, Minnesota, Oklahoma, Pennsylvania, and Washington all have similar laws in place.

Of course, this new law is good news for all brick-and-mortar retailers in Connecticut, who were already required to include taxes into their pricing. While this may impact CT citizens wallets immediately, the broader impact of this bill will likely be positive for the state as a whole.

Conclusion

The current deficit situation in Connecticut is giving rise to many different tax solutions that are in the pipeline as we speak. Some of these changes will impact citizens across the state. From groceries to cars and online purchases, keeping up-to-date with these new tax laws can help you prepare for shifts in the way you pay.

If you're looking at all of these new laws and thinking, "I need a budget and a tax expert." Great! Contact our firm at 860-628-4995 or online to set up a consultation. We'll help you plan for the future. You work for your money; we work for you!