An Act Exempting The Sale And Use Of Certain Tangible Personal Property For Mixed-income Developments From The Sales And Use Taxes.
Summary
HB 5977 would expand Connecticut’s sales and use tax exemptions for certain housing-related purchases by adding a new category for mixed-income developments. Under the bill, tangible personal property used in the development, construction, rehabilitation, renovation, repair, or operation of dwelling units in a mixed-income development would be exempt from sales and use tax, provided the project is certified by the commissioner and the purchaser supplies the required certification and exemption certificate to the retailer.
The bill also retains and restates existing exemptions for housing facilities serving low- and moderate-income families when sponsored by nonprofit housing organizations or housing authorities, and for certain mutual housing association projects. It defines “mixed-income development” to require that at least 40 percent of units be deed-restricted for at least 40 years, with at least 15 percent of all units reserved for households at or below 60 percent of median income and the remainder of the restricted units at or below 80 percent of median income. The measure is effective October 1, 2025, and applies to sales on or after that date.
Impact
The bill would amend Connecticut General Statutes section 12-412(29), broadening the state’s sales and use tax exemption framework for affordable housing-related projects. Its practical effect is to reduce project costs for qualifying mixed-income developments by exempting eligible building materials and related tangible personal property from tax, while preserving the existing exemption structure for nonprofit and housing-authority-sponsored low- and moderate-income housing and certain mutual housing projects. The bill would also require commissioner certification and purchaser documentation to claim the exemption, creating an administrative approval process for qualifying developments and retailers.
Sentiment
The available voting history suggests generally favorable committee sentiment toward the bill. After earlier procedural votes with no recorded yeas or nays, the Finance, Revenue and Bonding Committee approved the measure on April 24, 2025 by a 42-10 joint favorable vote, indicating substantial support but not unanimity. No committee transcript was provided, so the record reflects support for using tax policy to encourage housing development rather than detailed debate.
Contention
The main points of contention are likely to center on the fiscal cost of expanding a tax exemption and whether the benefit is appropriately targeted. Supporters would view the bill as a housing-supply incentive that lowers development costs for mixed-income projects and encourages long-term affordability through deed restrictions. Opponents may question whether the exemption is too broad, whether mixed-income projects should receive the same treatment as nonprofit affordable housing, and whether the state should forgo sales tax revenue for developments that include market-rate units. The certification and income-restriction requirements appear designed to address those concerns by limiting the exemption to projects meeting specific affordability thresholds.