Substitute Senate Bill No. 2 proposes significant modifications to Connecticut's tax structure, particularly focusing on tax exemptions for gas and electricity. The bill repeals and replaces subdivision (3) of section 12-412, effective October 1, 2026, to introduce a tax exemption for gas and electricity used in residential, agricultural, and industrial settings, provided that at least 75% of the energy is consumed for these purposes. It also establishes a new exemption for commercial or industrial businesses with gross income not exceeding ten million dollars and clarifies the definition of bottled gas to specifically refer to L.P. (propane) gas. Additionally, the bill maintains the current sales tax rate of 6.35% on gross receipts from retail sales while detailing various exemptions and tax rates for specific sales, including a new provision for motor vehicles used in business.

Moreover, the bill creates a new municipal diversification account, effective October 1, 2026, which will receive 50% of the tax revenue from meals sold by eating establishments. It mandates that tax revenues from specific sales taxes be distributed to municipalities based on where the sales occurred, requiring retailers to disaggregate their sales data by town. The bill also establishes the Connecticut-India Trade Commission to enhance trade relations between Connecticut and India, consisting of appointed members from the General Assembly and other sectors. The commission will operate without compensation for its members, who may be reimbursed for expenses, and is required to report annually on its activities. Overall, the bill aims to provide targeted tax relief, enhance local commerce, and foster international trade relations.

Statutes affected:
Committee Bill: 12-408d
FIN Joint Favorable Substitute: 12-408d
File No. 693: 12-408d