AN ACT CONCERNING A TAX CREDIT FOR MILK PRODUCERS.

House of Representatives
sHB5570 / File No. 672 1

General Assembly File No. 672
February Session, 2026 Substitute House Bill No. 5570

House of Representatives, April 16, 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 A TAX CREDIT FOR MILK PRODUCERS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. (NEW) (Effective January 1, 2027, and applicable to income and 1
taxable years commencing on or after January 1, 2027 ) (a) As used in this 2
section, "federal pay price", "milk producer" and "minimum sustainable 3
monthly cost of production" have the same meanings as provided in 4
section 22-265b of the general statutes. 5
(b) Each milk producer shall be allowed a credit against the tax 6
imposed under chapter 208 or 229 of the general statutes, other than the 7
liability imposed by section 12-707 of the general statutes, in an amount 8
equal to, for each month of the income or taxable year the federal pay 9
price is below the minimum sustainable monthly cost of production, (1) 10
the dollar amount the federal pay price was below the minimum 11
sustainable monthly cost of production, (2) multiplied by the amount of 12
milk produced by such milk producer for such month. Each milk 13
producer shall file with the Commissioner of Agriculture, in a form and 14
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manner prescribed by the commissioner, such information the 15
commissioner requires to substantiate the amount of milk produced by 16
such milk producer. 17
(c) (1) Any milk producer subject to the tax imposed under chapter 18
208 or 229 of the general statutes may apply to the Commissioner of 19
Agriculture, in a form and manner prescribed by the commissioner, to 20
reserve an allocation for a credit under this section. The application shall 21
contain such information as the commissioner deems necessary to 22
administer the provisions of this section. The aggregate amount of 23
credits reserved under this section shall not exceed eight million dollars 24
in any calendar year. 25
(2) Upon verification by the commissioner that the conditions set 26
forth in subsection (b) of this section have been satisfied and the amount 27
of milk produced by a milk producer has been substantiated, the 28
commissioner shall issue a voucher to the milk producer in the amount 29
calculated pursuant to subsection (b) of this section. The taxpayer shall 30
file the voucher with the taxpayer's state tax return for the applicable 31
income or taxable year. 32
(d) If the taxpayer is an S corporation or an entity treated as a 33
partnership for federal income tax purposes, the credit may be claimed 34
by the taxpayer's shareholders or partners. If the taxpayer is a single 35
member limited liability company that is disregarded as an entity 36
separate from its owner, the credit may be claimed by such limited 37
liability company's owner, provided such owner is subject to the tax 38
imposed under chapter 208 or 229 of the general statutes. 39
(e) If the amount of the credit allowed pursuant to this section 40
exceeds the taxpayer's liability for the tax imposed under chapter 208 or 41
229 of the general statutes, the Commissioner of Revenue Services shall 42
treat such excess as an overpayment and, except as provided in section 43
12-739 or 12-742 of the general statutes, shall refund the amount of such 44
excess, without interest, to such taxpayer. 45
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This act shall take effect as follows and shall amend the following
sections:

Section 1 January 1, 2027, and
applicable to income and
taxable years commencing
on or after January 1, 2027
New section

FIN Joint Favorable Subst.

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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. GF - Revenue
Loss
None Up to 8
million
Revenue Serv., Dept. GF - Cost None Up to
75,000
Department of Agriculture GF - Cost 115,808 115,808
State Comptroller - Fringe
Benefits1
GF - Cost 44,249 44,249
Note: GF=General Fund

Municipal Impact: None
Explanation
The bill, which establishes a refundable tax credit for milk producers,
results in (1) a General Fund revenue loss of up to $8 million annually
beginning in FY 28, (2) a one -time cost of up to $75,000 to the
Department of Revenue Services in FY 28 associated with programming
updates to the CTax tax administration system and myconneCT online
portal to establish the refundable credit, and (3) an ongoing cost to the
General Fund of $160,057 annually beginning in FY 27.
Ongoing Cost Impact
The Department of Agriculture (DoAg) does not currently have the
staff or expertise to establish a new tax credit program. DoAg will
require one new Grant and Contract Specialist with an annual salary of

1The fringe benefit costs for most state employees are budgeted centrally in accounts
administered by the Comptroller. The estimated active employee fringe benefit cost
associated with most personnel changes is 41.82% of payroll in FY 27.
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$105,808 and corresponding fringe benefits of $44,249 to establish and
administer the tax credit program for milk producers. Additionally,
DoAg will require $10,000 annually for licensing and software updates
to manage the data associated with the new program. It is estimated that
there are approximately 81 eligible milk producers in Connecticut.
The Out Years
The annualized ongoing revenue impact identified above would
continue into the future subject to the annual aggregate credit cap of $8
million; the annualized ongoing cost impact identified above would
continue into the future subject to inflation.

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OLR Bill Analysis
sHB 5570

AN ACT CONCERNING A TAX CREDIT FOR MILK PRODUCERS.

SUMMARY
This bill establishes a refundable tax credit for “milk producers ”
(people, firms, and corporations registered with the Department of
Agriculture (DoAg) as producers of milk for pasteurization). The credit
amount is calculated using the same formula that is used for an existing
state grant program that pays milk producers based on , generally, (1)
the federally set milk price and (2) an amount needed to sustain state
dairy operations.
The credit is available starting with the 2027 income and tax year and
may be applied against the corporation business or personal income tax,
but not the withholding tax. The bill caps the total amount of credits that
may be reserved for this program at $8 million per year.
EFFECTIVE DATE: January 1, 2027, and applicable to income and tax
years starting on or after that date.
MILK PRICING AND TERMS
Federal law governs the price paid to dairy farmers for milk.
Generally, U.S. Department of Agriculture (USDA) marketing orders set
the price for milk and milk products by region. One order sets the price
paid in the New England and Mid-Atlantic states and is broken down
into class 1 (fluid) milk and various other classes of milk products.
Under existing law and the bill, “federal pay price” is the northeast
monthly uniform price for milk in the Hartford zone pursuant to the
USDA Northeast Federal Milk Marketing Order. “Minimum sustainable
monthly cost of production” is 82% of the baseline the USDA’s
Economic Research Service determines as the monthly average cost of
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production for a New England state, or, if the baseline is unavailable, a
baseline determined by the DoAg commissioner using data and
variables published by USDA.
CREDIT FORMULA, RESERVATIONS, AND VOUCHERS
Under the bill, the tax credit equals, for each month of the income and
tax year that the federal pay price is below the minimum sustainable
monthly cost of production, the difference between the federal pay price
and the minimum sustainable monthly cost of production, multiplied
by the amount of milk a milk producer produced during the month.
Under the bill, milk producers may apply to the DoAg commissioner
to reserve a credit allocation. The commissioner must create the
application form, which must include the information he needs to
administer the tax credit program. Relatedly, the bill requires milk
producers to file with the commissioner information to support the
amount of milk they produced, in a way he prescribes. Once verified,
the commissioner must issue the milk producer a voucher for its credit
amount. The milk producer must file this voucher with its state tax
return for the applicable income or tax year.
CREDIT CLAIMS
If the milk producer is an S corporation or treated as a partnership for
federal income tax purposes, the milk producer’s shareholders and
partners may claim the credit. If the milk producer is a single member
limited liability company (LLC) that is disregarded as an entity separate
from its owner , the LLC’s owner may claim the credit , as long as the
owner is subject to either the corporation business or personal income
tax.
CREDIT REFUNDABILITY
As is the case under existing law for most other refundable tax
credits, t he bill requires the Department of Revenue Services
commissioner to refund, without interest, any amount of the tax credit
that exceeds a milk producer’s liability, unless he retains the refund,
which, by law, he may do if the milk producer (1) owes state or
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municipal taxes or other obligations or (2) is in default of a student loan
made by the Connecticut Student Loan Foundation or the Connecticut
Higher Education Supplemental Loan Authority.
BACKGROUND
Related Bill
sSB 84, § 27, favorably reported by the Finance, Revenue and Bonding
Committee, has identical provisions.
COMMITTEE ACTION
Finance, Revenue and Bonding Committee
Joint Favorable Substitute
Yea 53 Nay 0 (03/30/2026)