If your vehicle tax bill seems lower this year, you’re not imagining it. Thanks to a statewide change in how motor vehicles are taxed, most Connecticut drivers — including those in Thomaston — are likely to see reductions. But while that may come as welcome news for residents, local finance officials have raised concerns amounts to a 480,000 hit to the fiscal year 2026 town budget.

As part of a broader overhaul of the motor vehicle tax policy, the state legislature has implemented two key changes. The first, enacted in 2021, capped the motor vehicle mill rate at 32.46 across all municipalities — a move designed to ensure tax equity from town to town. Previously, communities with high mill rates charged significantly more than those with lower rates on identical vehicles.

The second change, which took effect with the October 1, 2024 Grand List, is being felt for the first time this year. It replaces the old valuation method — based on used-car pricing — with a new formula that begins with a vehicle’s original sticker price (MSRP) and applies a fixed depreciation schedule. Thomaston officials estimate this new method reduced the town’s motor vehicle assessment base by $14.8 million for fiscal year 2026, equating to a $479,719 decrease in tax revenue at the capped rate. Because the state does not reimburse municipalities for this drop, that revenue shortfall will need to be made up through real estate or personal property taxes, or cuts in spending.

Proponents of the state’s changes argue they bring long-overdue fairness and predictability to a tax that has often been regressive and volatile. During the pandemic, used-car prices soared, and with them, tax bills — even for older, modest vehicles. The new system shields taxpayers from such spikes and allows them to anticipate future tax bills based on a clear and consistent depreciation schedule.

For Thomaston, the challenge now is finding balance: easing the tax burden on drivers while maintaining services without the revenue they once contributed. How the town meets that challenge will become clearer as budget season unfolds.