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Read. Follow. Verify.Connecticut adjusts state revenues, corporation and cannabis taxes, R&D tax credits, and municipal aid
Last action · April 20, 2026: File Number 704Sponsors: REQUEST OF THE GOVERNOR PURSUANT TO JOINT RULE 9 and 2 others
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What This Bill Proposed
Substitute Senate Bill 84 implements the Governor's budget recommendations by modifying state revenue mechanisms, decoupling corporation business taxes from federal , establishing an R&D tax credit for qualified small businesses, replacing cannabis potency taxes with a single 10.75% tax, restructuring hospital provider taxes, and adjusting various fees, sales taxes, and municipal aid allocations starting in 2026 and 2027.
Changes tax rates, credits, and fees for corporations, cannabis retailers, milk producers, hospitals, and everyday consumers, while altering state revenue thresholds and municipal funding formulas across multiple fiscal years.
- State revenue adjustments in Connecticut frequently involve modifying corporate tax deductions, statutory volatility caps, and user fees to align with state budgetary targets and federal tax law changes. context
- The state's volatility cap mechanism automatically diverts estimated personal income tax and passthrough entity tax revenues exceeding an established threshold into the Budget Reserve Fund. context
Who It Would Have Affected
Groups the bill's text would have affected, as described in the record. Being affected is not a position for or against it.
Corporations
Corporation business taxpayers face decoupled depreciation rules and altered R&D expenditure deduction timelines.
Cannabis Retailers
Cannabis retailers, hybrid retailers, and micro-cultivators must collect and remit a single 10.75% gross receipts tax instead of potency-based taxes.
Licensed Professionals and Tradespeople
Hospitals
Hospitals are subject to a restructured provider tax framework utilizing federal fiscal year 2024 revenue baselines.
Milk Producers
Milk producers become eligible for a refundable tax credit when federal milk prices drop below production costs.
Key Facts
- Beginning with the 2026 income year, the state corporation business tax disallows the federal bonus depreciation deduction for qualified production property.
- Disallows retroactive application of federal R&E expenditure rules for the 2022 through 2025 income years, conforming to them starting in the 2026 income year.
- Establishes a 6% R&D tax credit for qualified small businesses with gross incomes of $70 million or less, capped at $1.5 million per business and $25 million in total annually.
- Increases the volatility cap threshold for FY 26 by $650 million to $5,378.6 million, and resets it to $5,009.1 million for FY 27.
Show all 13 facts
- Eliminates numerous occupational license, certification, and renewal fees for healthcare professionals, tradespeople, and educators.
- Replaces potency-based cannabis taxes with a single 10.75% gross receipts tax on cannabis retailers, hybrid retailers, and micro-cultivators, effective October 1, 2026.
- Creates a refundable tax credit for milk producers when the federal pay price falls below the minimum sustainable monthly cost of production, capped at $8 million annually.
- Explicitly subjects short-term peer-to-peer car sharing (30 days or less) to the 9.35% sales and use tax, directing revenue to the Special Transportation Fund.
- Increases the sales price threshold for motor vehicles subject to the 7.75% luxury sales tax from $50,000 to $75,000.
- Directs 50% of the additional 1% sales and use tax on meals and beverages to the Tourism Fund starting October 1, 2026.
- Increases the sales and use tax exemption for personal property used in burials and cremations from $2,500 to $10,000.
- Expands sales tax free week by raising the exemption limit from $100 to $300 and adding backpacks and cleated shoes.
- Replaces the current hospital provider tax starting July 1, 2027, with a 4% tax on inpatient services and tiered rates on outpatient services based on federal fiscal year 2024 revenue, while establishing reversion clauses if CMS finds the taxes impermissible.
Frequently Asked Questions
How does the bill change the tax on cannabis sales?
What changes are made to occupational license fees?
What is the new sales tax threshold for luxury motor vehicles?
How are milk producers affected by the legislation?
What else do you want to know?
News Coverage
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Votes, people, money & the original sourceWhere This Stands
This bill did not become law - Died at adjournment · on the Senate floor.
Procedural history
9 actions- Apr 20, 2026Connecticut General AssemblyFile Number 704
- Apr 20, 2026SenateSenate Calendar Number 425
- Apr 20, 2026SenateFavorable Report, Tabled for the Calendar, Senate
- Apr 20, 2026Connecticut General AssemblyReported Out of Legislative Commissioners' Office
- Apr 13, 2026Connecticut General AssemblyReferred to Office of Legislative Research and Office of Fiscal Analysis 04/20/26 12:00 PM
- Apr 1, 2026Connecticut General AssemblyFiled with Legislative Commissioners' Office
Show 3 earlier actions
- Mar 31, 2026Connecticut General AssemblyJoint Favorable Substitute
- Mar 5, 2026Connecticut General AssemblyPublic Hearing 03/11
- Feb 5, 2026Connecticut General AssemblyCommitteeReferred to Joint Committee on Finance, Revenue and Bonding
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
View official text →Lobbying Activity
No state lobbying filings in our records match this bill. Federal lobbying reports (LDA) cover Congress, so they are not listed on state bills.
Full breakdown
Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Sponsors
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Comprehensive Tax and Fee Restructuring
The legislation simultaneously enacts broad tax cuts for specific licensed professionals and milk producers while restructuring corporate, hospital, and cannabis taxation to manage state revenue balances.
Connected Entities
Sources
cga.ct.gov
Analysis Score
0–100- Significance20Lowered because this bill did not pass (its text scored 90)
- Controversy65Intensity of disagreement among stakeholders
- Entertainment10Compellingness for a non-policy-wonk reader
- Buzz40Current news / social attention level
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