Legislative Report Dave Bajumpaa
Dave Bajumpaa reviewed the legislative changes (and non-changes) that affects the interest of car hobbyists,and motor vehicle matters in general. The $500 maximum assessment for antique, rare or special interest motor vehicles 20 years old or older was not changed in the latest budget legislation. What did change for the upcoming tax year is the maximum mil rate any municipality can apply to motor vehicles.
Previously set at 40, it was reduced to a 32.48 mil rate.
Among other items changed, the manner in which assessment valuations for all motor vehicles, beginning, October 2023, will be calculated with a set formula specifying a depreciation schedule over a 20-year span. Beginning from the MSRP, the reduction begins at 80% 0f the MSRP in the first year of a new car. The rate drops over time, not dropping below 70% until year four. It further reduces to 10% of the MSRP at year 15, and at 20 years it can be no less than $500. But it appears that from 15 years into perpetuity, the assessment never drops below 10% which could be considerably greater than $500. This may effectively be a tax increase for many car owners over time. Under current law and DMV procedures, though, most if not all vehicles 20 years old and older will still qualify for the $500 maximum assessment.
Regarding our overtures to the DMV to discuss titling processes and the eligibility of composite vehicles for Classic registration and tax treatment, Dave reported he has not yet had any response from the Commissioner’s office. bills will be more predictable, as the assessed value of motor vehicles will be determined by a standard depreciation schedule based on a percentage of the initial Manufacturer’s Suggested Retail Price (MSRP) of the vehicle. As reported in the June Newsletter, on Page 709 of
739 of Public Act 22-118, the following depreciation schedule for the municipality assessed value for motor
vehicles is provided below:
For assessment years commencing on or after October 1, 2023, the following schedule of depreciation shall be applicable with respect to motor vehicles based on the manufacturer's suggested retail price of such motor vehicles, provided no motor vehicle shall be valued at an amount less than five hundred dollars
Age of Vehicle Percentage of Manufacturer’s Suggested Retail Price (MSRP)
Up to year one Eighty per cent
Year two Seventy-five per cent
Year three Seventy per cent
Year four Sixty-five per cent
Year five Sixty per cent
Year six Fifty-five per cent
Year seven Fifty per cent
Year eight Forty-five per cent
Year nine Forty per cent
Year ten Thirty-five per cent
Year eleven Thirty per cent
Year twelve Twenty-five per cent
Year thirteen Twenty per cent
Year fourteen Fifteen per cent
Years fifteen to
nineteen Ten per cent
Years twenty and
beyond Not less than five hundred dollars
This change to use a depreciation schedule makes it more consistent with the separate unchanged
maximum $500 assessment statute for antique, rare or special interest vehicles. Overall, this is a good thing
since it adds certainty to what the assessed value of any motor vehicle will be as a vehicle ages. I would note that the above depreciation schedule could have been clearer for vehicles twenty years old and older. "Not less than $500" by itself does not overtly specify what percentage of MSRP applies to those vehicles. Since it is depreciation, not appreciation, it would be reasonable to conclude a 20 year old or older vehicle would be assessed at no more than 10% of its MSRP (based on the 15 to 19 year old percentage) or a minimum of $500, whichever is higher.
Let’s take an example of a new Tesla with a MSRP of $100,000. In the first year, the assessed value would
be $80,000 and the tax would be 80 times the mill rate in your city or town. If your town has a mill rate of
30, the property tax you would pay on that brand new Tesla would be 80 times 30 or $2400 for that year. In
the future, when that Tesla becomes seven years old, it would be assessed at $50,000, and the property tax would be 50 times 30 or $1500 for that year (provided the mill rate in your town does not increase. In the
future, when that Tesla reaches 15 years old or older, it would be assessed at 10% of it's original $100,000
MSRP or $10,000 and the annual property tax would be $300 (again provided the mill rate in your town
does not increase). Arguing the value is less than $10,000 would be difficult, but at least the assessor in
your town should not be able to assess the vehicle at a value higher than $10,000.
Regarding this Tesla example, in 20 years the vehicle could get Classic Vehicle plates and the maximum
$500 assessment would be applied to that Tesla since it would fall under the definition of an Antique, Rare
or Special Interest Motor Vehicle as the Statutes currently allow.
So why does the depreciation schedule specify “No less than $500” for vehicles 20 years old and older? I
believe the intent of "Not less than $500" was to cover older motor vehicles. For example, a 1965 Mustang
with a $2427 MSRP would be assessed a $500 rather than $10% of the MSRP or $243. Note that the effective date of this depreciation schedule is October 1, 2023, so this new method determining the assessed value of motor vehicles will not be implemented until we receive our motor vehicle property tax bills in July 2024.
As a comparison, Massachusetts applies an annual state-wide excise tax on motor vehicles. To determine
the assessed value of a motor vehicle, Massachusetts also uses the MSRP and the following depreciation
schedule. The Massachusetts excise tax rate is $25 per each $1000 assessed value of a motor vehicle (or
an effective mill rate of 25):
Age of Vehicle Massachusetts -Percentage of Manufacturer’s Suggested Retail Price (MSRP)
Up to year one Ninety per cent
Year two Sixty per cent
Year three Forty per cent
Year four Twenty five per cent
Year five and onwards Ten per cent
Source for Massachusetts depreciation: Massachusetts General Laws Chapter 60A Section 1 and www.mass.gov/guides/motor-vehicle-excise. So, as noted above, the current motor vehicle depreciation schedule is much more rapid in Massachusetts than what is provided in Public Act 22- 118 for Connecticut motor vehicles starting with our July 2024 motor vehicle property tax bills Again, I want to emphasize that the maximum $500 assessment on antique, rare or special interest motor vehicles was not changed as shown on Page 715 of 739 of Public Act 22-118. So this provision remains intact. Very good news for the antique auto hobby
Titles and Composite Vehicle License Plates:
Regarding motor vehicle titles and obtaining Classic Vehicle plates for composite motor vehicles, I have
not yet gotten a response from the DMV regarding our written request to meet. I would note that the new depreciation schedule for all motor vehicles contained in Public Act 22-118 (discussed above and effective for our July 2024 motor vehicle tax bills) may alleviate some of the property tax concerns composite motor vehicle owners have been dealing with.
The Year of Manufacture license plate can now be displayed in Connecticut. Rules of use are - the Early American registration must be maintained, BOTH OF THE EARLY AMERICAN PLATES and the REGISTRATION FORM and APPLICATION TO DISPLAY YEAR OF ORIGINAL MANUFACTURE MARKER PLATE(S) (B-320 NEW 7-2000) FORM must be carried in the vehicle when operating on a public roads if displaying the YOM plate.
Link to Yom Plate Form https://portal.ct.gov/-/media/DMV/20/29/B-320.pdf
|(Left to Right) Dexter Crowley, Charlie Gunn, Scott Macgregor, and Wayne Chandler witness former Governor John Rowland signing the Year of Manufacture Plate Bill into Law.