Hospital Settlement

Historically, federal and state governments have treated hospitals as tax-exempt entities, recognizing the significant impact of the role they play in strengthening the health and well-being of the communities they serve. While most hospitals in Connecticut are not-for-profit and exempt from corporate, sales and use, and property taxes, they are one of the state’s largest providers of tax revenue, being taxed on their net patient revenue as part of a healthcare provider tax (hospital tax) common across the country.

In 2019, Governor Ned Lamont and the hospitals announced a historic settlement of a longstanding dispute around the hospital tax.

The settlement covers seven years, through 2026, gradually reducing the tax burden on hospitals, while preserving revenue gains for the state. In accordance with the settlement, hospitals received the third year of tax burden reduction in 2022, while providing more than $581 million in revenue gain for the state.

The tax not only supports general revenue contributions to the state government but also ensures important financial support for hospitals through supplemental payments and modest, annual rate increases.