Senate Bill No. 1262 aims to incentivize the construction of affordable housing by reducing the sales and use tax on certain goods used in new residential development projects. The bill proposes to amend section 12-408 of the general statutes by repealing subdivision (1) and replacing it with a new provision that establishes a reduced tax rate of 3% for tangible personal property purchased for projects that include either at least 50 affordable housing units or at least 20% of units designated as affordable housing. This new tax rate will be effective from July 1, 2025, and will not apply to projects that already qualify for existing exemptions under section 12-412. The bill also includes modifications to the tax structure, such as the deletion of previous subparagraphs and the introduction of new designations to accommodate these changes.

In addition to the tax rate adjustments, the bill outlines changes to the distribution of tax revenues, mandating that a percentage of the collected tax be allocated to the Tourism Fund, the Municipal Revenue Sharing Fund, and the Special Transportation Fund. Specifically, it sets a phased increase in the percentage of tax revenue deposited into the Special Transportation Fund, culminating in a full 100% deposit starting July 1, 2022. The bill is projected to result in an annual revenue loss of approximately $2.7 million for the state, with a one-time implementation cost of up to $150,000 for the Department of Revenue Services to update their tax administration systems. Overall, SB 1262 seeks to promote affordable housing development while adjusting the state's tax framework to reflect current economic conditions.

Statutes affected:
Raised Bill: 4-66o
HSG Joint Favorable: 4-66o
File No. 71: 4-66o