AN ACT CONCERNING THE SALES AND USE TAXES RATE FOR AND APPLICABILITY TO CERTAIN MOTOR VEHICLES, PEER-TO-PEER CAR SHARING AND CERTAIN PERSONAL PROPERTY USED IN BURIALS AND CREMATIONS, DEDICATING FUNDING FOR THE TOURISM FUND AND INCREASING THE EXEMPTION AMOUNT FOR SALES TAX-FREE WEEK.

House of Representatives
sHB5443 / File No. 684 1

General Assembly File No. 684
February Session, 2026 Substitute House Bill No. 5443

House of Representatives, April 20, 2026

The Committee on Finance, Revenue and Bonding reported
through REP. HORN of the 64th Dist., Chairperson of the
Committee on the part of the House, that the substitute bill
ought to pass.

AN ACT CONCERNING THE SALES AND USE TAXES RATE FOR
AND APPLICABILITY TO CERTAIN MOTOR VEHICLES, PEER-TO-
PEER CAR SHARING AND CERTAIN PERSONAL PROPERTY USED
IN BURIALS AND CREMATIONS, DEDICATING FUNDING FOR THE
TOURISM FUND AND INCREASING THE EXEMPTION AMOUNT FOR
SALES TAX-FREE WEEK.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Subdivision (1) of section 12 -408 of the general statutes is 1
repealed and the following is substituted in lieu thereof (Effective October 2
1, 2026, and applicable to sales occurring on or after October 1, 2026): 3
(1) (A) For the privilege of making any sales, as defined in 4
subdivision (2) of subsection (a) of section 12 -407, at retail, in this state 5
for a consideration, a tax is hereby imposed on all retailers at the rate of 6
six and thirty -five-hundredths per cent of the gross receipts of any 7
retailer from the sale of all tangible personal property sold at retail or 8
from the rendering of any services constituting a sale in accordance with 9
subdivision (2) of subsection (a) of section 12-407, except, in lieu of said 10
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sHB5443 / File No. 684 2

rate, the rates provided in subparagraphs (B) to (I), inclusive, of this 11
subdivision; 12
(B) (i) At a rate of fifteen per cent with respect to each transfer of 13
occupancy, from the total amount of rent received by a hotel or lodging 14
house for the first period not exceeding thirty consecutive calendar 15
days; 16
(ii) At a rate of eleven per cent with respect to each transfer of 17
occupancy, from the total amount of rent received by a bed and 18
breakfast establishment for the first period not exceeding thirty 19
consecutive calendar days; 20
(C) With respect to the sale of a motor vehicle to any individual who 21
is a member of the armed forces of the United States and is on full-time 22
active duty in Connecticut and who is considered, under 50 [App] USC 23
App 574, a resident of another state, or to any such individual and the 24
spouse thereof, at a rate of four and one -half per cent of the gross 25
receipts of any retailer from such sales, provided such retailer requires 26
and maintains a declaration by such individual, prescribed as to form 27
by the commissioner and bearing notice to the effect that false 28
statements made in such declaration are punishable, or other evidence, 29
satisfactory to the commissioner, concerning the purchaser's state of 30
residence under 50 [App] USC App 574; 31
(D) (i) With respect to the sales of computer and data processing 32
services occurring on or after July 1, 2001, at the rate of one per cent, and 33
(ii) with respect to sales of Internet access services, on and after July 1, 34
2001, such services shall be exempt from such tax; 35
(E) (i) With respect to the sales of labor that is otherwise taxable under 36
subparagraph (C) or (G) of subdivision (2) of subsection (a) of section 37
12-407 on existing vessels and repair or maintenance services on vessels 38
occurring on and after July 1, 1999, such services shall be exempt from 39
such tax; 40
(ii) With respect to the sale of a vessel, a motor for a vessel or a trailer 41
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used for transporting a vessel, at the rate of two and ninety -nine-42
hundredths per cent, except that the sale of a vessel shall be exempt from 43
such tax if such vessel is docked in this state for sixty or fewer days in a 44
calendar year; 45
(iii) With respect to the sale of dyed diesel fuel, as defined in 46
subsection (d) of section 12-487, sold by a marine fuel dock exclusively 47
for marine purposes, at the rate of two and ninety-nine-hundredths per 48
cent; 49
(F) With respect to patient care services for which payment is 50
received by the hospital on or after July 1, 1999, and prior to July 1, 2001, 51
at the rate of five and three-fourths per cent and on and after July 1, 2001, 52
such services shall be exempt from such tax; 53
(G) (i) With respect to the rental or leasing of a passenger motor 54
vehicle for a period of thirty consecutive calendar days or less, at a rate 55
of nine and thirty-five-hundredths per cent; 56
(ii) With respect to peer-to-peer car sharing, as defined in section 13b-57
127, for a period of thirty consecutive calendar days or less, at a rate of 58
nine and thirty-five-hundredths per cent; 59
(H) With respect to the sale of (i) a motor vehicle for a sales price 60
exceeding [fifty] seventy-five thousand dollars, at a rate of seven and 61
three-fourths per cent on the entire sales price, (ii) jewelry, whether real 62
or imitation, for a sales price exceeding five thousand dollars, at a rate 63
of seven and three-fourths per cent on the entire sales price, and (iii) an 64
article of clothing or footwear intended to be worn on or about the 65
human body, a handbag, luggage, umbrella, wallet or watch for a sales 66
price exceeding one thousand dollars, at a rate of seven and three -67
fourths per cent on the entire sales price. For purposes of this 68
subparagraph, "motor vehicle" has the meaning provided in section 14-69
1, but does not include a motor vehicle subject to the provisions of 70
subparagraph (C) of this subdivision, a motor vehicle having a gross 71
vehicle weight rating over twelve thousand five hundred pounds, or a 72
motor vehicle having a gross vehicle weight rating of twelve thousand 73
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five hundred pounds or less that is not used for private passenger 74
purposes, but is designed or used to transport merchandise, freight or 75
persons in connection with any business enterprise and issued a 76
commercial registration or more specific type of registration by the 77
Department of Motor Vehicles; 78
(I) With respect to the sale of meals, as defined in subdivision (13) of 79
section 12-412, sold by an eating establishment, caterer or grocery store; 80
and spirituous, malt or vinous liquors, soft drinks, sodas or beverages 81
such as are ordinarily dispensed at bars and soda fountains, or in 82
connection therewith; in addition to the tax imposed under 83
subparagraph (A) of this subdivision, at the rate of one per cent; 84
(J) The rate of tax imposed by this chapter shall be applicable to all 85
retail sales upon the effective date of such rate, except that a new rate 86
that represents an increase in the rate applicable to the sale shall not 87
apply to any sales transaction wherein a binding sales contract without 88
an escalator clause has been entered into prior to the effective date of the 89
new rate and delivery is made within ninety days after the effective date 90
of the new rate. For the purposes of payment of the tax imposed under 91
this section, any retailer of services taxable under subdivision (37) of 92
subsection (a) of section 12 -407, who computes taxable income, for 93
purposes of taxation under the Internal Revenue Code of 1986, or any 94
subsequent corresponding internal revenue code of the United States, 95
as amended from time to time, on an accounting basis that recognizes 96
only cash or other valuable consideration actually received as income 97
and who is liable for such tax only due to the rendering of such services 98
may make payments related to such tax for the period during which 99
such income is received, without penalty or interest, without regard to 100
when such service is rendered; 101
(K) (i) For calendar quarters ending on or after September 30, 2019 , 102
the commissioner shall deposit into the regional planning incentive 103
account, established pursuant to section 4-66k, six and seven-tenths per 104
cent of the amounts received by the state from the tax imposed under 105
subparagraph (B) of this subdivision and ten and seven -tenths per cent 106
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sHB5443 / File No. 684 5

of the amounts received by the state from the tax imposed under 107
subparagraph (G)(i) of this subdivision; 108
(ii) For calendar quarters ending on or after September 30, 2018, the 109
commissioner shall deposit into the Tourism Fund established under 110
section 10-395b ten per cent of the amounts received by the state from 111
the tax imposed under subparagraph (B) of this subdivision; 112
(L) (i) For calendar months commencing on or after July 1, 2021, but 113
prior to July 1, 2023, the commissioner shall deposit into the municipal 114
revenue sharing account established pursuant to section 4-66l seven and 115
nine-tenths per cent of the amounts received by the state from the tax 116
imposed under subparagraph (A) of this subdivision, including such 117
amounts received on or after July 1, 2023, attributable to the fiscal year 118
ending June 30, 2023; and 119
(ii) For calendar months commencing on or after July 1, 2023, the 120
commissioner shall deposit into the Municipal Revenue Sharing Fund 121
established pursuant to section 4-66p seven and nine-tenths per cent of 122
the amounts received by the state from the tax imposed under 123
subparagraph (A) of this subdivision; [and] 124
(M) (i) For calendar months commencing on or after July 1, 2017, the 125
commissioner shall deposit into the Special Transportation Fund 126
established under section 13b -68 seven and nine -tenths per cent of the 127
amounts received by the state from the tax imposed under 128
subparagraph (A) of this subdivision; 129
(ii) For calendar months commencing on or after July 1, 2018, but 130
prior to July 1, 2019, the commissioner shall deposit into the Special 131
Transportation Fund established under section 13b -68 eight per cent of 132
the amounts received by the state from the tax imposed under 133
subparagraphs (A) and (H) of this subdivision on the sale of a motor 134
vehicle; 135
(iii) For calendar months commencing on or after July 1, 2019, but 136
prior to July 1, 2020, the commissioner shall deposit into the Special 137
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Transportation Fund established under section 13b -68 seventeen per 138
cent of the amounts received by the state from the tax imposed under 139
subparagraphs (A) and (H) of this subdivision on the sale of a motor 140
vehicle; 141
(iv) For calendar months commencing on or after July 1, 2020, but 142
prior to July 1, 2021, the commissioner shall deposit into the Special 143
Transportation Fund established under section 13b -68 twenty-five per 144
cent of the amounts received by the state from the tax imposed under 145
subparagraphs (A) and (H) of this subdivision on the sale of a motor 146
vehicle; 147
(v) For calendar months commencing on or after July 1, 2021, but 148
prior to July 1, 2022, the commissioner shall deposit into the Special 149
Transportation Fund established under section 13b -68 seventy-five per 150
cent of the amounts received by the state from the tax imposed under 151
subparagraphs (A) and (H) of this subdivision on the sale of a motor 152
vehicle; and 153
(vi) For calendar months commencing on or after July 1, 2022, the 154
commissioner shall deposit into the Special Transportation Fund 155
established under section 13b -68 one hundred per cent of the amounts 156
received by the state from the tax imposed under subparagraphs (A) 157
and (H) of this subdivision on the sale of a motor vehicle; 158
(N) For calendar quarters ending on or after December 31, 2026, the 159
commissioner shall deposit into the Special Transportation Fund 160
established under section 13b -68 one hundred per cent of the amounts 161
received by the state from the tax imposed under subparagraph (G)(ii) 162
of this subdivision; and 163
(O) For calendar months commencing on or after October 1, 2026, the 164
commissioner shall deposit into the Tourism Fund established under 165
section 10-395b fifty per cent of the amounts received by the state from 166
the tax imposed under subparagraph (I) of this subdivision. 167
Sec. 2. Subdivision (1) of section 12 -411 of the general statutes is 168
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repealed and the following is substituted in lieu thereof (Effective October 169
1, 2026, and applicable to sales occurring on or after October 1, 2026): 170
(1) (A) An excise tax is hereby imposed on the storage, acceptance, 171
consumption or any other use in this state of tangible personal property 172
purchased from any retailer for storage, acceptance, consumption or any 173
other use in this state, the acceptance or receipt of any services 174
constituting a sale in accordance with subdivision (2) of subsection (a) 175
of section 12-407, purchased from any retailer for consumption or use in 176
this state, or the storage, acceptance, consumption or any other use in 177
this state of tangible personal property which has been manufactured, 178
fabricated, assembled or processed from materials by a person, either 179
within or without this state, for storage, acceptance, consumption or any 180
other use by such person in this state, to be measured by the sales price 181
of materials, at the rate of six and thirty-five-hundredths per cent of the 182
sales price of such property or services, except, in lieu of said rate: 183
(B) (i) At a rate of fifteen per cent of the rent paid to a hotel or lodging 184
house for the first period not exceeding thirty consecutive calendar 185
days; 186
(ii) At a rate of eleven per cent of the rent paid to a bed and breakfast 187
establishment for the first period not exceeding thirty consecutive 188
calendar days; 189
(C) With respect to the storage, acceptance, consumption or use in 190
this state of a motor vehicle purchased from any retailer for storage, 191
acceptance, consumption or use in this state by any individual who is a 192
member of the armed forces of the United States and is on full -time 193
active duty in Connecticut and who is considered, under 50 [App] USC 194
App 574, a resident of another state, or to any such individual and the 195
spouse of such individual at a rate of four and one -half per cent of the 196
sales price of such vehicle, provided such retailer requires and 197
maintains a declaration by such individual, prescribed as to form by the 198
commissioner and bearing notice to the effect that false statements made 199
in such declaration are punishable, or other evidence, satisfactory to the 200
commissioner, concerning the purchaser's state of residence under 50 201
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[App] USC App 574; 202
(D) (i) With respect to the acceptance or receipt in this state of labor 203
that is otherwise taxable under subparagraph (C) or (G) of subdivision 204
(2) of subsection (a) of section 12 -407 on existing vessels and repair or 205
maintenance services on vessels occurring on and after July 1, 1999, such 206
services shall be exempt from such tax; 207
(ii) (I) With respect to the storage, acceptance or other use of a vessel 208
in this state, at the rate of two and ninety -nine-hundredths per cent, 209
except that such storage, acceptance or other use shall be exempt from 210
such tax if such vessel is docked in this state for sixty or fewer days in a 211
calendar year; 212
(II) With respect to the storage, acceptance or other use of a motor for 213
a vessel or a trailer used for transporting a vessel in this state, at the rate 214
of two and ninety-nine-hundredths per cent; 215
(III) With respect to the storage, acceptance or other use of dyed diesel 216
fuel, as defined in subsection (d) of section 12 -487, exclusively for 217
marine purposes, at the rate of two and ninety -nine-hundredths per 218
cent; 219
(E) (i) With respect to the acceptance or receipt in this state of 220
computer and data processing services purchased from any retailer for 221
consumption or use in this state occurring on or after July 1, 2001, at the 222
rate of one per cent of such services, and (ii) with respect to the 223
acceptance or receipt in this state of Internet access services, on and after 224
July 1, 2001, such services shall be exempt from such tax; 225
(F) With respect to the acceptance or receipt in this state of patient 226
care services purchased from any retailer for consumption or use in this 227
state for which payment is received by the hospital on or after July 1, 228
1999, and prior to July 1, 2001, at the rate of five and three -fourths per 229
cent and on and after July 1, 2001, such services shall be exempt from 230
such tax; 231
(G) (i) With respect to the rental or leasing of a passenger motor 232
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vehicle for a period of thirty consecutive calendar days or less, at a rate 233
of nine and thirty-five-hundredths per cent; 234
(ii) With respect to peer-to-peer car sharing, as defined in section 13b-235
127, for a period of thirty consecutive calendar days or less, at a rate of 236
nine and thirty-five-hundredths per cent; 237
(H) With respect to the acceptance or receipt in this state of (i) a motor 238
vehicle for a sales price exceeding [fifty] seventy-five thousand dollars, 239
at a rate of seven and three-fourths per cent on the entire sales price, (ii) 240
jewelry, whether real or imitation, for a sales price exceeding five 241
thousand dollars, at a rate of seven and three -fourths per cent on the 242
entire sales price, and (iii) an article of clothing or footwear intended to 243
be worn on or about the human body, a handbag, luggage, umbrella, 244
wallet or watch for a sales price exceeding one thousand dollars, at a 245
rate of seven and three -fourths per cent on the entire sales price. For 246
purposes of this subparagraph, "motor vehicle" has the meaning 247
provided in section 14-1, but does not include a motor vehicle subject to 248
the provisions of subparagraph (C) of this subdivision, a motor vehicle 249
having a gross vehicle weight rating over twelve thousand five hundred 250
pounds, or a motor vehicle having a gross vehicle weight rating of 251
twelve thousand five hundred pounds or less that is not used for private 252
passenger purposes, but is designed or used to transport merchandise, 253
freight or persons in connection with any business enterprise and issued 254
a commercial registration or more specific type of registration by the 255
Department of Motor Vehicles; 256
(I) With respect to the acceptance or receipt in this state of meals, as 257
defined in subdivision (13) of section 12 -412, sold by an eating 258
establishment, caterer or grocery store; and spirituous, malt or vinous 259
liquors, soft drinks, sodas or beverages such as are ordinarily dispensed 260
at bars and soda fountains, or in connection therewith; in addition to the 261
tax imposed under subparagraph (A) of this subdivision, at the rate of 262
one per cent; 263
(J) (i) For calendar quarters ending on or after September 30, 2019, the 264
commissioner shall deposit into the regional planning incentive 265
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account, established pursuant to section 4-66k, six and seven-tenths per 266
cent of the amounts received by the state from the tax imposed under 267
subparagraph (B) of this subdivision and ten and seven -tenths per cent 268
of the amounts received by the state from the tax imposed under 269
subparagraph (G)(i) of this subdivision; 270
(ii) For calendar quarters ending on or after September 30, 2018, the 271
commissioner shall deposit into the Tourism Fund established under 272
section 10-395b ten per cent of the amounts received by the state from 273
the tax imposed under subparagraph (B) of this subdivision; 274
(K) (i) For calendar months commencing on or after July 1, 2021, but 275
prior to July 1, 2023, the commissioner shall deposit into the municipal 276
revenue sharing account established pursuant to section 4-66l seven and 277
nine-tenths per cent of the amounts received by the state from the tax 278
imposed under subparagraph (A) of this subdivision, including such 279
amounts received on or after July 1, 2023, attributable to the fiscal year 280
ending June 30, 2023; and 281
(ii) For calendar months commencing on or after July 1, 2023, the 282
commissioner shall deposit into the Municipal Revenue Sharing Fund 283
established pursuant to section 4-66p seven and nine-tenths per cent of 284
the amounts received by the state from the tax imposed under 285
subparagraph (A) of this subdivision; [and] 286
(L) (i) For calendar months commencing on or after July 1, 2017, the 287
commissioner shall deposit into said Special Transportation Fund seven 288
and nine-tenths per cent of the amounts received by the state from the 289
tax imposed under subparagraph (A) of this subdivision; 290
(ii) For calendar months commencing on or after July 1, 2018, but 291
prior to July 1, 2019, the commissioner shall deposit into the Special 292
Transportation Fund established under section 13b -68 eight per cent of 293
the amounts received by the state from the tax imposed under 294
subparagraphs (A) and (H) of this subdivision on the acceptance or 295
receipt in this state of a motor vehicle; 296
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(iii) For calendar months commencing on or after July 1, 2019, but 297
prior to July 1, 2020, the commissioner shall deposit into the Special 298
Transportation Fund established under section 13b -68 seventeen per 299
cent of the amounts received by the state from the tax imposed under 300
subparagraphs (A) and (H) of this subdivision on the acceptance or 301
receipt in this state of a motor vehicle; 302
(iv) For calendar months commencing on or after July 1, 2020, but 303
prior to July 1, 2021, the commissioner shall deposit into the Special 304
Transportation Fund established under section 13b -68 twenty-five per 305
cent of the amounts received by the state from the tax imposed under 306
subparagraphs (A) and (H) of this subdivision on the acceptance or 307
receipt in this state of a motor vehicle; 308
(v) For calendar months commencing on or after July 1, 2021, but 309
prior to July 1, 2022, the commissioner shall deposit into the Special 310
Transportation Fund established under section 13b -68 seventy-five per 311
cent of the amounts received by the state from the tax imposed under 312
subparagraphs (A) and (H) of this subdivision on the acceptance or 313
receipt in this state of a motor vehicle; and 314
(vi) For calendar months commencing on or after July 1, 2022, the 315
commissioner shall deposit into the Special Transportation Fund 316
established under section 13b -68 one hundred per cent of the amounts 317
received by the state from the tax imposed under subparagraphs (A) 318
and (H) of this subdivision on the acceptance or receipt in this state of a 319
motor vehicle; 320
(M) For calendar quarters ending on or after December 31, 2026, the 321
commissioner shall deposit into the Special Transportation Fund 322
established under section 13b -68 one hundred per cent of the amounts 323
received by the state from the tax imposed under subparagraph (G)(ii) 324
of this subdivision; and 325
(N) For calendar months commencing on or after October 1, 2026, the 326
commissioner shall deposit into the Tourism Fund established under 327
section 10-395b fifty per cent of the amounts received by the state from 328
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the tax imposed under subparagraph (I) of this subdivision. 329
Sec. 3. Subdivision (55) of section 12 -412 of the 2026 supplement to 330
the general statutes is repealed and the following is substituted in lieu 331
thereof (Effective October 1, 2026, and applicable to sales occurring on or after 332
October 1, 2026): 333
(55) Sales of (A) tangible personal property by any funeral 334
establishment performing the primary services in preparation for and 335
the conduct of burial or cremation, provided any such property must be 336
used directly in the performance of such services and the total amount 337
of such exempt sales with respect to any single funeral may not exceed 338
[two thousand five hundred ] ten thousand dollars, or (B) caskets used 339
for burial or cremation. 340
Sec. 4. Section 12 -407e of the general statutes is repealed and the 341
following is substituted in lieu thereof (Effective from passage): 342
(a) [(1) From the third Sunday in August until the Saturday next 343
succeeding, inclusive, during the period beginning July 1, 2004, and 344
ending June 30, 2015, the provisions of this chapter shall not apply to 345
sales of any article of clothing or footwear intended to be worn on or 346
about the human body the cost of which article to the purchaser is less 347
than three hundred dollars. 348
(2) On and after July 1, 2015, from] From the third Sunday in August 349
until the Saturday next succeeding, inclusive, the provisions of this 350
chapter shall not apply to sales of any article of clothing or footwear 351
intended to be worn on or about the human body or to any backpack , 352
the cost of which article or backpack to the purchaser is less than [one] 353
three hundred dollars. 354
(b) For the purposes of this section, clothing or footwear shall not 355
include (1) any special clothing or footwear primarily designed for 356
athletic activity or protective use and which is not normally worn except 357
when used for the athletic activity or protective use for which it was 358
designed, and (2) jewelry, handbags, luggage other than backpacks , 359
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umbrellas, wallets, watches and similar items carried on or about the 360
human body but not worn on the body in the manner characteristic of 361
clothing intended for exemption under this section. 362
This act shall take effect as follows and shall amend the following
sections:

Section 1 October 1, 2026, and
applicable to sales
occurring on or after
October 1, 2026
12-408(1)
Sec. 2 October 1, 2026, and
applicable to sales
occurring on or after
October 1, 2026
12-411(1)
Sec. 3 October 1, 2026, and
applicable to sales
occurring on or after
October 1, 2026
12-412(55)
Sec. 4 from passage 12-407e

FIN Joint Favorable Subst.

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sHB5443 / File No. 684 14

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of
the General Assembly, solely for purposes of information, summarization and explanation and do not
represent the intent of the General Assembly or either chamber thereof for any purpose. In general,
fiscal impacts are based upon a variety of informational sources, including the analyst’s professional
knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final
products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:
Agency Affected Fund-Effect FY 27 $ FY 28 $
Revenue Serv., Dept. Various -
Revenue Impact
See Below See Below
Note: Various=Various
Municipal Impact: None
Explanation
The bill makes various changes to the sales and use tax listed below.
Table 1 provides the FY 27 impact of each policy change under the bill.
Table 2 summarizes the net impact of this bill by Fund.
Table 1: Impact of HB 5443 by Policy – in millions
Section Policy Fund FY 27 FY 28
Secs 1 & 2 Tax peer -to-peer services at the
9.35% rate
STF 0.7 0.9
Secs 1 & 2 Increase the luxury tax thresholds
for the 7.75% luxury sales tax rate
from $50,000 to $75,000
STF (14.5) (19.8)
Secs 1 & 2 Dedicate 50% of the 1% meals tax to
the Tourism Fund
GF (44.5) (60.8)
Tourism 44.5 60.8
Sec 3 Increase the sales tax exemption for
certain personal property used in
burials and cremations from $2,500
to $10,000
GF (2.5) (3.5)
STF (0.2) (0.3)
MRSF (0.2) (0.3)
Total (3.0) (3.1)
Sec 4 Increase the threshold for the sales
tax holiday from $100 to $300 and
expanding the holiday to include
backpacks
GF (2.1) (2.2)
STF (0.2) (0.2)
MRSF (0.2) (0.2)
Total (2.5) (2.6)
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sHB5443 / File No. 684 15

Table 2: Net Impact of HB 5443 by Fund – in millions
Fund FY 27 FY 28
General Fund (GF) (49.1) (66.4)
Special Transportation Fund (STF) (14.2) (19.4)
Tourism Fund 44.5 60.8
Municipal Revenue Sharing Fund (MRSF) (0.4) (0.5)
Net Total All Funds (19.3) (25.5)

The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation.

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sHB5443 / File No. 684 16

OLR Bill Analysis
sHB 5443

AN ACT CONCERNING THE SALES AND USE TAXES RATE FOR
AND APPLICABILITY TO CERTAIN MOTOR VEHICLES, PEER -TO-
PEER CAR SHARING AND CERTAIN PERSONAL PROPERTY USED
IN BURIALS AND CREMATIONS, DEDICATING FUNDING FOR THE
TOURISM FUND AND INCREASING THE EXEMPTION AMOUNT
FOR SALES TAX-FREE WEEK.

SUMMARY
This bill makes the following sales and use tax changes:
1. increases the sales price threshold for a motor vehicle subject to
the 7.75% sales and use tax rate from $50,000 to $75,000 (§§ 1 &
2);
2. directs 50% of the additional 1% sales and use tax on meals and
beverages to the Tourism Fund (§§ 1 & 2);
3. increases the exemption amount for “sales tax free week” from
$100 to $300 and adds backpacks to list of exempt items (§ 4);
4. explicitly subjects short-term peer -to-peer (P2P) car sharing to
the 9.35% sales and use tax rate applicable to passenger motor
vehicle rentals or leases and directs this revenue to the Special
Transportation Fund (§§ 1 & 2); and
5. increases the sales and use tax exemption for certain personal
property used in burials and cremations from $2,500 to $10,000 (§
3).
EFFECTIVE DATE: October 1, 2026, and applicable to sales occurring
on or after that date, except that the changes to sales tax free week are
effective upon passage.
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§§ 1 & 2 — MOTOR VEHICLES SUBJECT TO LUXURY TAX RATE
The bill increases, from $50,000 to $75,000, the sales price threshold
for motor vehicles subject to the 7.75% sales and use tax rate (known as
the luxury tax rate).
By law, this rate applies to the full sales price of motor vehicles
costing more than the threshold amount, except for vehicles (1)
purchased by an active duty U. S. military member stationed in
Connecticut; (2) weighing over 12,500 pounds; or (3) weighing 12,500
pounds or less that are designed or used for commercial purposes and
issued a commercial or more specific type of registrati on from the
Department of Motor Vehicles.
§§ 1 & 2 — MEALS AND BEVERAGES TAX DIVERSION TO
TOURISM FUND
Existing law imposes an additional 1% tax on meals and certain
beverages that applies on top of the 6.35% sales and use tax rate. Starting
October 1, 2026, the bill directs half of the revenue from this 1% tax to
the Tourism Fund.
Under current law, the Tourism Fund receives 10% of room
occupancy tax revenue.
§§ 1 & 2 — SALES AND USE TAX ON PEER -TO-PEER CAR
SHARING
The bill explicitly subjects short-term P2P car sharing to sales and use
tax at the 9.35% rate that applies to short-term car rentals or leases under
existing law (see BACKGROUND). As with car rentals and leases, the
9.35% tax rate applies only to P2P car sharing for periods of 30
consecutive days or less. By law, car rentals and leases for longer periods
are subject to sales and use tax at the 6.35% rate.
Under the bill, the revenue from sales and use tax on short-term P2P
car sharing must be directed to the Special Transportation Fund, starting
with calendar quarters ending on or after December 31, 2026.
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§ 3 — PERSONAL PROPERTY USED IN BURIALS AND
CREMATIONS
Current law exempts from the 6.35% sales and use tax property sold
by funeral homes and used directly in preparing and conducting burials
and cremations , up to $2,500 per funeral . The bill increases this
exemption to up to $10,000 per funeral.
§ 4 — SALES TAX FREE WEEK
The bill expands the sales and use tax exemption for clothing and
footwear sold from the third Sunday in August through the following
Saturday (sales tax free week) to (1) items costing less than $300, rather
than $100, and (2) backpacks costing less than $300.
Under current law, during this week, the state’s 6.35% sales and use
tax does not apply to clothing and footwear costing less than $100 ,
except for (1) special athletic and protective clothing and footwear not
normally worn except for its specialized use and (2) jewelry, handbags,
luggage, umbrellas, wallets, watches, and similar items that people
carry but do not wear.
BACKGROUND
DRS Guidance on Peer-to-Peer Car Sharing and Sales and Use
Tax
In 2021, DRS issued guidance stating that P2P car sharing constitutes
a lease of a motor vehicle under the sales and use tax laws and is taxable
if the sale is made by a retailer (and not on a casual or isolated basis).
The guidance notes that a 9.35% sales tax applies to the rental or lease of
a passenger motor vehicle for a period of 30 consecutive days or less.
It further concluded that a P2P car sharing company that meets the
law’s definition of a marketplace facilitator must collect and remit tax
on sales that take place on its platform. (Marketplace facilitators are
generally businesses that (1) facilitate retail sales of at least $250,000
during the previous 12 -month period for sellers by providing a forum
that lists or advertises the sellers’ goods and services; (2) collect receipts
from customers; (3) remit payments to sellers; and (4) are compensated
for their services. By law, they are considered retailers for these sales
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and, therefore, must collect and remit sales tax for them.)
Related Bills
sSB 1, § § 1-2 & 7, favorably reported by the Finance, Revenue and
Bonding Committee, exempts from sales and use tax (1) nonelectronic
school supplies, including backpacks; (2) clothing and footwear costing
less than $100 (and correspondingly eliminates “sales tax free week” for
these items); and (3) sandwiches, grinders, coffee, and tea prepared and
sold in a supermarket for takeout, other than when they are sold in the
food court or snack bar area (which are currently subject to the
additional 1% meals and beverages tax).
sSB 2, §§ 2 -5, favorably reported by the Finance, Revenue and
Bonding Committee, dedicates half of the additional 1% tax on meals
and beverages to the Tourism Fund and the other half to a new
municipal diversification account, starting October 1, 2026.
sSB 84, §§ 28 -31, favorably reported by the Finance, Revenue and
Bonding Committee, has similar provisions.
COMMITTEE ACTION
Finance, Revenue and Bonding Committee
Joint Favorable Substitute
Yea 53 Nay 0 (03/31/2026)