Hate the car tax? You might not like what could replace it

A new bill would phase-out the car tax over five years. For the assessment year starting on October 1, your car’s first $5,000 of value would be exempt. That exemption keeps growing until 2028, when the tax would end completely.

John Craven

Apr 1, 2024, 9:37 PM

Updated 14 days ago


If you hate the property tax on cars, you’re not alone. For decades, Connecticut lawmakers have tried – and failed – to get rid of it.
On Monday, they considered the latest proposal to scrap the unpopular tax. But critics are already raising concerns.
Steve Balser, of Norwalk, pays enough for gas. His car tax bill adds insult to injury.
“I’m a little tired of it,” he said. “It’s been there for a lot of years.”
A new bill would phase-out the car tax over five years. For the assessment year starting on October 1, your car’s first $5,000 of value would be exempt. That exemption keeps growing until 2028, when the tax would end completely.
That sounds great to drivers like Blake Henry, of Norwalk.
"Absolutely,” he said. “I don’t like paying unnecessarily, and I don't feel like paying a car tax.”
Before you get too excited, there’s a catch.
“If we get rid of the car tax, does that mean that property taxes are going to go up?” Balser asked. “Because they’ve got to raise the money somehow.”
Balser is right. The car tax generates more than $1 billion for local services, roads and schools. To replace all that lost money, towns could tax a larger portion of your home or commercial property – from the current 70% of the assessed value, to 90% by 2028.
“We … should look to eliminate the car tax,” Randy Collins, with the Connecticut Conference of Municipalities, told the Legislature’s Finance, Revenue and Bonding Committee. “But we just need to do it in a way that we’re not creating a billion-dollar hole.”
Would you trade off the car tax for paying more on your house or business?
“Depends.” Henry said. “It’s all subjective, right? If you’ve got a small house or a bit larger house.”
Some lawmakers worry that the change will make Connecticut’s housing crisis even worse.
“We all know that homeowners will go up on their rents if their property taxes go up,” said state Rep. Bobby Sanchez (D-New Britain).
Others believe it will hit small businesses hard.
“Who own their buildings, who don’t have commercial fleets, who would see a commensurate increase in their property tax,” said state Rep. Holly Cheeseman (R-East Lyme), the committee’s top Republican.
Gov. Ned Lamont thinks the plan should be optional.
“I would leave that up to towns and municipalities,” he said Monday. “Let them do it on their own schedule.”
Lamont’s budget office also opposes the bill, arguing that changing the assessment rate could cost the state millions.
“The assessment rate change will impact the real property valuation of state‑owned, private colleges, general hospitals, and free‑standing chronic disease hospitals,” wrote Jeffrey Beckham, the governor’s budget secretary. “These valuations are part of statutory formula grants and have the potential to increase the cost of the Tiered Payment in Lieu of Taxes (PILOT) payment.”
The proposal came from a Motor Vehicle Tax Task Force. But the panel’s own members refused to endorse its recommendations.
“We need to do more work, and I am not endorsing this report because it’s not ready yet,” said Department of Revenue Services Commissioner Mark Boughton, a member of the panel.
The panel suggested a second option: Keep the car tax, but only for commercial vehicles. That would still leave towns with a budget hole, potentially for the state to plug.
Task force members said they couldn’t endorse the recommendations until they had specifics about how much each option would cost all 169 cities and towns in Connecticut.
“There is a need for a continued look at comprehensive property tax reform,” said Mayor Ben Florsheim (D-Middletown).
The task force also considered an extra fuel tax – perhaps only on gas-guzzling vehicles – or an added fee on insurance carriers.
Balser thinks he has a better idea.
“I wouldn’t mind it so much if I could deduct it on either state or federal or something,” he said. “But having to pay it just straight out just bothers me a little bit.”
Drivers already got some relief in 2022, when the state capped car tax rates at 32.46 mills.
But rates are still wildly unequal. Take your tax bill for a car worth $25,000 (with a taxable value of $17,500, at the current 70% of assessment ratio):
  • Bridgeport: $568
  • Fairfield: $481
  • Greenwich: $199
And that’s if car owners even pay the tax. Many simply evade it, opting to register their cars in other states, or in towns with a lower tax rate.

More from News 12