Connecticut enacts highway use tax

Starting January 1, 2023, Connecticut will levy a highway use tax (“HUT”) on every carrier operating heavy, multi-unit motor vehicles on any state highways or public roads.

The HUT tax will apply to any motor vehicle with a gross weight of 26,000 lbs. or more and in classes 8 through 13 of the Federal Highway Administration Vehicle Classification. Under the bill, the “gross weight” is the light weight of the vehicle without the driver, plus the load. The bill establishes a per mile tax that increases based on vehicle weight and ranges from 2.5 cents to 17.5 cents per mile.

The law requires each carrier to apply for a permit from the Department of Revenue Services (“DRS”) for each vehicle operated on Connecticut roadways, and a copy of the permit will be required to be kept in each vehicle. Substantial penalties and possible estimated assessments will be issued against motor carriers that are not in compliance with the new law.

Businesses will be required to maintain records for a least four years after filing in case of inspection by the DRS.  Starting January 1, 2023, the state prohibits any eligible vehicle from operating in Connecticut without a HUT permit and will impose penalties and interest for noncompliance.

Mazars’ Insight

Business owners need to evaluate if requirements are met and obtain a HUT permit from the DRS for all eligible vehicles. This new mandate requires businesses to report to DRS and remit the tax monthly, with a list of all eligible motor vehicles operated in the month.

It is important for businesses to know the type of vehicles operated, as the weight specifications and tax rates are different and tax calculations are evaluated per vehicle operated each month. The DRS requires monthly reporting even if no vehicles were operated during the month.

While preparing for this upcoming change, it is critical for businesses to analyze their fleet and determine classification and tax implications. In addition, many other states, among them New York, New Mexico, Oregon and Kentucky have similar HUT-type taxes, so a thorough analysis of state laws and registration requirements is prudent.

Please contact your Mazars professional for additional information.

Published on August 26, 2021