Senate Bill No. 510 introduces a capital gains surcharge of 1.75% on net gains from the sale or exchange of capital assets for certain taxpayers starting in the 2027 tax year. This surcharge applies to individuals, excluding trusts or estates, whose Connecticut adjusted gross income exceeds specified thresholds: $1 million for single filers and married individuals filing separately, $1.6 million for heads of households, and $2 million for married couples filing jointly. Taxpayers are permitted a one-time exclusion for capital gains from the sale of their primary residence in Connecticut or from the sale of their ownership interest in a business. The bill also mandates that affected taxpayers file a report with the Department of Revenue Services by April 15, detailing their capital gains and surcharge liability.

Additionally, the bill establishes a penalty for late payment of the surcharge, set at 10% of the unpaid amount or a minimum of $50, with interest accruing at 1% per month until payment is made. The commissioner has the discretion to waive the penalty if the taxpayer can show reasonable cause for the delay. The bill incorporates existing provisions from sections 12-550 to 12-554 and section 12-555a of the general statutes to ensure consistent enforcement and application of the surcharge. It also clarifies the treatment of capital gains under federal law, distinguishing between long-term and short-term capital gains, and was favorably reported by the Finance, Revenue and Bonding Committee with a vote of 35 in favor and 18 against on April 1, 2026.