Connecticut State Department of Revenue Services

2025 Legislative Overview - Miscellaneous Taxes and Administrative Provisions

 

2025 Regular Session of the Connecticut General Assembly

Overview of Legislation

Miscellaneous Taxes and Administrative Provisions

 

Second Hospital User Fee:

  • Changes to the Second Hospital User Fee (SHUF): Legislation makes several changes to the Second Hospital User Fee.  Under the current law, the SHUF is determined using each hospital’s audited net revenue for federal fiscal year 2016. For state fiscal years commencing on or after July 1, 2026, and prior to July 1, 2029, each hospital is to determine its SHUF liability using its audited net revenue for federal fiscal year 2024.  For state fiscal years commencing on or after July 1, 2029, and prior to July 1, 2033, each hospital is to determine its SHUF liability using its audited net revenue for federal fiscal year 2027. For the periods commencing with the state fiscal year commencing July 1, 2033, and quadrennially thereafter, each hospital is to determine its SHUF liability using its audited net revenue for the federal fiscal year that concluded in the calendar year that is two years prior to the start of such quadrennial period.  The legislation also adjusts the statutory formula for calculating the rate applicable to outpatient hospital services. The legislation also requires hospitals to provide the Commissioner with information necessary to calculate a hospital’s audited net revenue for the applicable federal fiscal year. Hospitals that fail to submit the requisite information are subject to penalty. In addition, if, as a result of an audit, the Commissioner increases a hospital’s audited net revenue for a federal fiscal year, the hospital is authorized to challenge the Commissioner’s determination with regard thereto. This legislation is effective July 1, 2026, and applicable to calendar quarters commencing on or after July 1, 2026.  

Nursing Home and Intermediate Care Facility User Fees:

  • Shift from Fees Based on Resident Days to Taxes Based on Revenues: Under current law, both the Nursing Home User Fee and the Intermediate Care Facility User Fee are calculated by multiplying the statutorily prescribed user fee by the home’s or facility’s resident days for the calendar quarter. For calendar quarters beginning on or after July 1, 2026, the legislation imposes a 6% tax on “nursing facility service revenue” and “ICF service revenue.” This legislation is effective July 1, 2026 and is applicable to calendar quarters commencing on or after July 1, 2026.

Cigarette taxes:

  • Legislation amends the definition of “cigarette” for purposes of Chapter 214: Legislation modified the definition of the term “cigarette” set forth in Conn. Gen. Stat. § 12-285(b). As amended, said definition now conforms with the definition of “cigarette” as used in the Master Settlement Agreement. This legislation is effective July 1, 2025.
  • Legislation requires the Commissioner to respond to comments received from local law enforcement officials in connection with renewals of cigarette dealer’s licenses: Under current law, municipalities are allowed to adopt ordinances requiring any person who is seeking to renew a cigarette dealer’s license to simultaneously give written notice of said renewal to the chief law enforcement official or his or her designee in the municipality where the business is located. Current law also allows the chief law enforcement official or designee to send written comments on the renewal to the Commissioner of Revenue Services and requires Commissioner to consider the comments before renewing the license. Under the new legislation, the Commissioner is now obligated to respond in detail to all of the comments received from any chief law enforcement official or designee. This legislation is effective July 1, 2025.

Regulation of Electronic Cigarettes:

  • Legislation amends provisions governing the regulation of electronic cigarettes: Legislation modified the provisions governing the regulation of electronic cigarettes so as to conform to said provisions with the provisions governing the regulation of traditional cigarettes. Included among the amendments is the enactment of a provision that authorizes the Commissioner of Revenue Services to impose civil penalties on persons who violate these provisions. This legislation is effective July 1, 2025.

Bottle Deposits:

  • Legislation excludes THC-infused beverages and hard cider from the provisions of the bottle bill: Legislation amends the definition of “carbonated beverage” set forth in Conn. Gen. Stat. § 22a-243 to exclude THC-infused beverages and hard cider therefrom. As a result, said beverages are not subject to the provisions bottle bill. This legislation is effective from passage.

Prescription Drugs:

  • New provisions relative to the regulation of prices of certain prescription drugs: Legislation sets forth restrictions on the amounts that can be charged by certain pharmaceutical manufacturers and wholesale distributors for certain prescription drugs. The legislation authorizes the Commissioner of Revenue Services to impose civil penalties against those pharmaceutical manufacturers and wholesale distributors that violate these pricing restrictions. The legislation sets forth how any such penalty is to be calculated and requires that such penalties be issued on an annual basis. In addition, the legislation provides any pharmaceutical manufacturer and wholesale distributors that is assessed such a penalty with the ability to challenge the imposition of such a penalty, including taking an appeal to the superior court. This legislation is effective July 1, 2025.

Administrative Provisions:

  • Modification to the schedule governing the issuance of Tax Gap reports: Legislation modifies the schedule for the issuance of the Tax Gap report.  Under the new schedule prescribed by the General Assembly, the next Tax Gap report is due to be submitted on or before December 15, 2026.  In addition, the legislation now directs that the Commissioner of Revenue Services submit subsequent Tax Gap reports every two years, rather than annually.  This legislation is effective July 1, 2025.  
  • Modification to both the schedule governing the issuance and content of the Tax Incidence reports: Under current law, the Commissioner of Revenue Services is required to issue a full tax incidence report every two years, with the next full report due by December 15, 2025.  The legislation modified this schedule to now require the Commissioner to issue a full report every four years.  Thus, after the issuance of the report on December 15, 2025, the next full report will be due by December 15, 2029.  In the interim, and starting with a report due December 15, 2027, the legislation requires the Commissioner to issue a report that pertains solely to the income tax, pass-through entity tax, sales and excise taxes, and corporation business tax.   This legislation is effective from passage. 
  • New legislation requires the Commissioner to track the sources of certain tax revenues: Starting with the fiscal year commencing July 1, 2025 and for each fiscal year thereafter, newly enacted legislation requires the Commissioner of Revenue Services to track and record the source of state sales and use taxes (Chapter 219), personal income tax (Chapter 229), and corporation business tax (Chapter 208) revenue to accurately and fairly attribute the revenue from each of these taxes to municipalities. In order to meet this statutory charge, the legislation requires taxpayers paying these taxes to provide disaggregated information and any other required data to the Commissioner.   The legislation further requires that the Commissioner post on the Department’s website a list of all municipalities and the amount of revenue from each of these taxes attributed to each municipality for the applicable fiscal year.  The report is due October 31, 2026, and annually thereafter. The legislation is effective from passage.  
  • New legislation establishes a pilot program relative to the collection of state taxes: New legislation requires the Office of Policy and Management (OPM) and the Commissioner of Revenue Services to establish a pilot program to collect taxes owed by persons who are receiving payments from a state agency. The legislation requires OPM and the Commissioner to present said pilot program to the Finance, Revenue and Bonding Committee by January 1, 2026.This legislation is effective from passage. 
  • Department of Economic and Community Development to consult with Commissioner relative to a study as to the economic impact of a soccer stadium: New legislation requires the Department of Economic and Community Development to consult with Commissioner of Revenue Services to assess the proposed Connecticut United Football club stadium’s anticipated economic impact on Connecticut and the city of Bridgeport. The legislation is effective from passage.