The bill sHB5492, also known as File No. 542, introduces a new Farm Investment Tax Credit for eligible farmers in Connecticut, which is defined as taxpayers with at least two-thirds of their federal gross income from farming exceeding $30,000. This credit amounts to 20% of the cost of qualified farm investment property, such as machinery, equipment, and buildings acquired after January 1, 2025. The credit can be claimed by S corporations, partnerships, and single-member LLCs, and any excess credit beyond the taxpayer's liability will be refunded. The bill also includes a recapture provision, requiring repayment of the credit if the property is not used in agricultural production within the state for a specified period, with full repayment if disposed of within three years and 50% repayment if within five years.

Furthermore, the bill amends property tax exemptions for farmers, allowing municipalities to provide an additional exemption for farm machinery up to an assessed value of $250,000, and for buildings used in farming or to house seasonal farm employees up to $500,000 per building. Farmers must apply annually for the exemption by November 1st with a notarized affidavit showing at least $15,000 in gross sales or expenses from farming. The bill is effective from January 1, 2025, and is expected to result in a General Fund revenue loss of approximately $2.5 million annually from FY 26, with a one-time cost of up to $75,000 for system updates. The bill passed the Finance, Revenue and Bonding Committee with a unanimous vote.

Statutes affected:
Raised Bill: 12-91
FIN Joint Favorable: 12-91
File No. 542: 12-91