Connecticut has various property tax relief programs in place for different groups of homeowners. These programs aim to alleviate the burden of property taxes and offer financial assistance to specific categories of individuals, including the disabled, the elderly, and veterans. While Connecticut provides relief through certain mechanisms, other states have additional programs that Connecticut does not offer. Let’s explore the different types of property tax relief available in Connecticut and compare them to programs in other states.
Types of Property Tax Relief Mechanisms
Homestead Exemptions and Credits
Homestead relief programs are widely used across the US and operate by exempting a portion of a property’s value from taxation or providing rebates on the taxes paid. Unfortunately, Connecticut does not currently provide any form of homestead relief.
A “circuit breaker” program prevents homeowners from paying property taxes that exceed a certain percentage of their income. While Connecticut has a sliding scale circuit breaker program for elderly homeowners, other states have broader programs that encompass a wider range of individuals or use a threshold approach instead of a sliding scale.
Tax freeze programs aim to freeze either the amount of property tax due or the assessed value of the property based on a specific year. Although Connecticut implemented a tax freeze program in 1965, it has phased it out since 1979. However, many other states still have active tax freeze programs.
Tax deferral programs allow eligible homeowners to postpone the payment of property taxes until a designated date. While Connecticut permits municipalities to defer property taxes, some states make it mandatory for them to offer this option.
Understanding Property Tax
Property taxes are based on both the market value and assessed value of a property. The market value represents the property’s actual monetary worth, while the assessed value is the portion subject to taxation. In Connecticut, properties are taxed at 70% of their fair market value. Therefore, if a residential home has a market value of $200,000, its assessed value would be $140,000.
The tax rate is determined by multiplying the assessed value by the tax rate set by the municipality. Connecticut expresses tax rates in mils, with one mil representing one-tenth of a cent. For example, in a municipality with a tax rate of 1 mil, the owner of a residential home with an assessed value of $140,000 would owe $140 in property taxes.
Property Tax Relief Programs in Connecticut
Connecticut has various property tax relief programs in place, primarily catering to specific groups of homeowners. Let’s explore some of these programs:
Exemption for the Disabled
Municipalities in Connecticut must provide a $1,000 property tax exemption to qualifying homeowners with disabilities. To be eligible, homeowners must meet certain criteria established by the state, such as receiving permanent total disability benefits under Social Security or qualifying for permanent disability benefits under a government retirement plan. Municipalities also have the option to provide an additional exemption of up to $1,000.
Exemption for the Blind
Qualifying homeowners in Connecticut who are blind are entitled to a $3,000 property tax exemption. This exemption is based on specific statutory criteria, and municipalities may provide an additional exemption of up to $2,000.
Standard Exemption for Veterans
Municipalities in Connecticut must provide eligible veterans or their surviving parents with a $1,000 property tax exemption. Eligibility is limited to war time veterans, surviving spouses, and veterans who retired from the military or left due to disability. Additionally, municipalities may offer an additional exemption of up to $10,000 or 10% of the property’s assessed value to veterans who receive the standard exemption, subject to statutory income limits.
Additional Exemption for Veterans
All eligible veterans who receive the standard exemption in Connecticut are entitled to an additional exemption based on their income. The additional exemption amount ranges from $500 to $2,000, depending on the household’s income level.
Exemption for Disabled Veterans
Connecticut municipalities provide property tax exemptions to veterans with disability ratings from the Veterans’ Administration or their surviving spouses. The amount of the exemption varies depending on the disability rating, ranging from $1,500 to $3,000. Married veterans with incomes below certain thresholds may qualify for an additional exemption equal to 200% of their disabled veterans’ exemption.
Exemption for Severely Disabled Veterans
Municipalities in Connecticut must provide veterans with severe disabilities or their surviving spouses with property tax exemptions. The exemption amount varies depending on the type of injury, ranging from $5,000 to $10,000. Similar to the previous program, married veterans with incomes below certain thresholds may qualify for an additional exemption equal to 200% of their severely disabled veterans’ exemption.
Circuit Breaker for Elderly or Disabled Homeowners
Connecticut offers a “circuit breaker” program that provides state-reimbursed property tax credits to homeowners who are at least 65 years old or totally disabled. The program includes income eligibility requirements, and the maximum benefit ranges from $1,000 to $1,250, depending on the filing status.
Tax Freeze for the Disabled or Elderly
Connecticut previously had a tax freeze program for elderly homeowners but has not accepted new applicants since 1979. Under the program, homeowners paid no more than the amount of taxes they paid in their first year enrolled in the program.
Income Tax Credit for Property Tax Paid
Connecticut indirectly reduces property tax payments by offering an income tax credit for property tax paid on primary residences and privately owned or leased motor vehicles. The credit amount depends on the property tax due, the taxpayer’s adjusted gross income, and may range up to $300.
Optional Relief Programs
In addition to the mandatory relief programs, Connecticut municipalities have the option to provide additional relief to specific groups. These include firefighters, emergency personnel, surviving spouses of police officers or firefighters, and homeowners whose property taxes exceed 8% of their income. The relief can take the form of abatements, exemptions, or deferrals, subject to certain conditions.
Property Tax Relief Programs in Other States
While Connecticut offers various programs to provide property tax relief for homeowners, other states have their own unique mechanisms in place. Let’s explore some programs implemented in other states:
Homestead relief programs, such as homestead exemptions and credits, are prevalent across the US. Forty-seven states, excluding Connecticut, provide homestead relief through exemptions or credits, primarily benefiting veterans and disabled individuals.
For example, Illinois offers the General Homestead Exemption (GHE), which exempts a certain increase in the property’s equalized assessed value (EAV) from property taxes. They also have exemptions for senior citizens and a Long-Time Occupant Homestead Exemption (LOHE) for qualified individuals.
Thirty-two states, including Connecticut, use circuit breaker programs to provide property tax relief. These programs are often targeted at low- to moderate-income households. While Connecticut adopts a sliding scale approach, other states use either fixed rebate amounts or a threshold approach based on income to determine eligibility.
States like New Hampshire have a Low and Moderate Income Homeowner’s Property Tax Relief Program, which provides state refunds to eligible homeowners based on their income and property tax paid.
Twelve states, including Connecticut, have tax freeze programs. These programs freeze property taxes or the assessed value of properties at a particular year’s level. While Connecticut does not accept new applicants for its program, other states like New Mexico offer assessment freezes for low-income disabled or elderly homeowners.
Property Tax Deferral
Property tax deferral programs are authorized in 28 states, including Connecticut. These programs allow homeowners to postpone paying property taxes, with the deferred taxes becoming a lien against the property. While Connecticut gives municipalities the option to defer property taxes, some states mandate deferral programs.
For instance, Nevada allows low-income homeowners with household incomes below the federal poverty level and specific home values to defer property taxes for up to three years at a six percent interest rate.
Connecticut law mandates property tax relief programs for specific groups of homeowners, including the disabled, the elderly, and veterans. However, other states offer additional relief mechanisms, such as homestead exemptions, circuit breakers, tax freezes, and tax deferrals. These programs cater to a broader range of individuals, including low- and moderate-income homeowners. While Connecticut has its own unique approaches to property tax relief, it is essential to explore the various relief programs available nationwide to ensure homeowners receive the assistance they need.