The bill sHB5492, also known as File No. 542, introduces a new Farm Investment Tax Credit for eligible farmers in Connecticut, effective January 1, 2025. An "eligible farmer" is defined as a taxpayer whose federal gross income from farming is at least two-thirds of their excess federal gross income over $30,000. The tax credit is set at 20% of the amount paid or incurred for farm investment property, which includes machinery, equipment, and buildings used in agricultural production. The credit is refundable, meaning if it exceeds the taxpayer's liability, the excess is treated as an overpayment and refunded. However, the bill includes recapture provisions if the property is not used in agricultural production in Connecticut for the required period, with a 100% recapture if the property is not held for three years and a 50% recapture if not held for five years. The bill also amends Section 12-91 of the general statutes to exempt from local property taxation all farm machinery (except motor vehicles) up to an assessed value of $100,000, as well as horses or ponies used exclusively in farming.

Furthermore, the bill allows municipalities to increase the property tax exemption for farm machinery from $100,000 to $250,000 and for buildings used in farming or housing seasonal farm employees from $100,000 to $500,000 per eligible building. The bill specifies that shareholders of S corporations, partners in partnerships, and owners of single-member LLCs can claim the credit, and any excess credit can be refunded by the DRS commissioner. The recapture clause requires repayment of the tax credit if the property is no longer used for agricultural production within the state, with full repayment if disposed of within three years and 50% repayment if disposed of within five years. An insertion in the bill exempts farmers from recapture requirements if the credited property is replaced. The bill received a joint favorable vote from the Finance, Revenue and Bonding Committee with 50 yeas and 0 nays.

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