Opinion: The Facts About Connecticut's Motor Vehicle Tax Fix

The following op-ed was written by Democratic state Representatives Jennifer Leeper, Cristin McCarthy Vahey and Sarah Keitt:

You may have heard that last week the legislature met in special session to address changes to the car tax. Namely, we fixed how vehicles are assessed and valued in order to calculate the amount of your tax. Unlike the exaggerated partisan rhetoric and misinformation being spread about this legislation, the bipartisan vote in the House created both a fix to existing statute that: 1) prevented tax increases on commercial vehicles and; 2) creates predictability via a new valuation method and depreciation schedule for all vehicle owners.

It's easy in an election cycle to claim one party is raising taxes. It’s much harder to take the time to
understand a complex policy solution which is supported by the Connecticut Business and Industry Association as helping to, "avert a massive tax increase for many commercial vehicles." Without this fix, commercial vehicle owners throughout the state, primarily small business owners, would no longer be able to take advantage of the car tax cap of 32.46 mills.

The "they raised your car taxes" claim fails to point out this important fact, and one of the primary reasons the Governor called a special session – to assure this fix was passed. The House, in another bipartisan vote, had passed a largely identical bill in the regular session, but the bill was amended in the Senate and failed to become law.

Beyond limiting taxes for commercial vehicles, the bill requires local assessors to utilize the MSRP, i.e. the sticker price, and an annual depreciation schedule, rather than the National Automobile Dealers Association (NADA) appraisal guide, to determine a vehicle's value. The NADA method meant that if used car prices spike, as they did during the pandemic, your car's value and your tax did as well. Using the MSRP and a depreciation schedule decouples your taxes from market fluctuations and provides a dependable, predictable valuation that will decrease each year.

When the MSRP and depreciation schedule go into effect this Fall, those same used car owners who paid a higher-than-normal tax during the pandemic should see their taxes go down. Those car owners with new, higher end vehicles, may see their assessed value, and therefore their taxes, increase in the first year. In the years following, all vehicle owners' valuation will be lowered annually.

Your car tax bill is determined by both the valuation method (statutorily determined) and the mill rate (locally determined). When determining the depreciation schedule, the legislature worked with municipalities over the course of years to ensure a rate that would not negatively impact local budgets. This year's bills in both regular and special session increased that depreciation schedule by 5%, with the aim of keeping municipalities whole. What does not change is the fact that assessors calculate taxes owed on only 70% of the assessed value of the vehicle. This new formula provides predictability for both taxpayers and municipalities. Many, if not most, will see their car values and taxes go down.

Seem confusing? If so, you are not alone. Between valuation, depreciation, assessment ratios, and mill rates, there are a lot of complex calculations that go into the car tax. As your representatives in Hartford, we are committed to trying to give you the full and complex set of facts, not misleading with politically motivated sound bites. People just need the facts to decide for themselves. As your representatives, we are committed to dialing down the temperature of campaign rhetoric and providing solutions for our communities.

Rep. Jennifer Leeper, House District 132
Rep. Cristin McCarthy Vahey, House District 133
Rep. Sarah Keitt, House District 134