2024 overview of sales tax in Connecticut

Welcome to Kintsugi's rundown on tax rates in the state of Connecticut. Connecticut's sales tax rates can vary depending on state, county/city, and local tax rates, as well as specific provisions in the tax code.

As of 2024, the base state sales tax rate in Connecticut is 6.35%. Unlike many other states, Connecticut does not have varying county or city rates; therefore, there is no differentiation between the highest and lowest rates in counties, making the Connecticut sales tax car rate uniformly the same across the state.

Additionally, the state does not impose separate district rates, maintaining a consistent 6.35% statewide. This streamlined approach simplifies tax administration but can mean fewer opportunities for local tax rate manipulation due to uniform regulation.

Sales tax range in Connecticut

Connecticut's sales tax landscape in 2024 reflects stability with no changes from 2023 rates across various categories, maintaining the same Connecticut sales tax rate as well as the ct sales tax rate for state purposes.

General Sales Tax Rate: The general merchandise sales tax rate remains at 6.35%.

Luxury Goods Tax: A higher rate of 7.75% continues for luxury items such as jewelry over $5,000, motor vehicles over $50,000, and apparel over $1,000.

Prepared Food and Beverages: A rate of 7.35% is still applied to restaurant meals, catering, and beverages.

Hotel and Lodging Tax: The tax rate for hotel accommodations remains at 15%.

Digital Goods and Online Services: Digital goods, such as e-books, digital music, and streaming services, remain taxed at 6.35%.

Calculating Connecticut sales tax

Determine the Taxable Amount: Identify the total sales price of the tangible personal property or service. Make sure to include any associated charges like shipping and handling if applicable.

State Sales Tax Rate: The general sales tax rate for Connecticut is 6.35%.

Local Sales Tax: Connecticut does not impose additional local sales taxes.

E-commerce Sales: E-commerce transactions are generally subject to the same 6.35% state sales tax. Remote sellers must collect Connecticut sales tax if their annual gross revenue from sales in the state exceeds $100,000 or 200 transactions.

Software as a Service (SaaS): SaaS is considered a taxable service in Connecticut and is subject to the 6.35% state sales tax.

Other Services: Various services such as labor charges for repair or maintenance are generally taxable at 6.35% as per state regulations. Business services like consulting may be exempt unless specified as taxable in state statutes.

Tax Exemptions: Verify if the product or service falls under any tax exemptions listed in Connecticut’s tax regulations. Examples of exempt items include most groceries and prescription medications.

Out-of-State Sales: Products shipped out of Connecticut for use outside the state are typically not subject to Connecticut sales tax.

Collect and Remit: Gather the required sales tax from the customer at the time of purchase. Remit collected taxes to the Connecticut Department of Revenue Services as required (monthly, quarterly, or annually depending on your volume).

Keep Records: Maintain detailed records of all sales transactions and tax collections for compliance purposes.

Understanding use tax in Connecticut

Use tax is levied on the storage, use, or consumption of goods or services purchased out-of-state for use within Connecticut when sales tax has not been paid at the time of purchase.

This tax ensures that out-of-state purchases are taxed at a comparable rate to Connecticut’s sales tax, thereby maintaining fair competition between in-state and out-of-state sellers.

The use tax rate in Connecticut is the same as the state sales tax rate, also referred to as the ct sales tax rate, which is currently 6.35%, and can be determined using a ct state sales tax rate calculator.

Items subject to use tax include online purchases, mail-order goods, and items bought on trips to other states if no sales tax or if a lower sales tax rate was applied at the point of sale.

For example, if an online retailer does not collect Connecticut sales tax on a purchase, the buyer is responsible for remitting use tax to the Connecticut Department of Revenue Services (DRS).

Consumers are generally required to report and pay use tax on their Connecticut state income tax return using Form OP-186.

For businesses, any item purchased without paying sales tax intended for business use, resale, or incorporation into a final product is subject to use tax. Businesses must report and pay use tax using Form OS-114, the Sales and Use Tax Return.

It is worth noting that there are some exemptions and exclusions on which use tax may not apply, such as for certain business purchases and production materials.

Recent changes to Connecticut sales tax

In 2024, Connecticut implemented several changes to its sales tax regulations.

These updates reflect Connecticut's responses to both economic changes and constituent needs, with specific focus areas on family expenses and digital services.

• The general sales tax rate remained constant at 6.35%. This is unchanged from 2023.
• On January 1, 2024, a new exemption was introduced for children's clothing and footwear priced under $100. Previously, these items were taxed if priced above $50.
• Another exemption starting July 1, 2024, is for certain over-the-counter medications without a prescription. In 2023, all such items were taxed at the standard rate.
• The state expanded the tax-free week for back-to-school shopping from one week in August to two weeks, effective from August 2024. In 2023, only one week was allotted for this exemption.
• Connecticut also decreased the tax rate on prepared meals from 7.35% to 6.35%, which began on January 1, 2024. In 2023, prepared meals had a higher rate due to an additional 1%.
• On April 1, 2024, a new tax of 1% was introduced on digital advertising services, which was not present in 2023.

Excise and discretionary taxes and other sales tax considerations in Connecticut

Sales and Use Tax

General Rate: Connecticut levies a general sales tax at a rate of 6.35%.

Reduced Rates: Certain items may be taxed at reduced rates. For example, computer and data processing services are taxed at 1%. There are also exemptions for certain essential items, like groceries and prescription medicines.

Excise Taxes

Alcohol: Connecticut imposes excise taxes on alcoholic beverages. Rates vary by type and volume, e.g., beer, wine, and spirits have different rates.

Tobacco: There is a per-pack excise tax on cigarettes, as well as taxes on other tobacco products, such as cigars and smokeless tobacco.

Gasoline: The state imposes an excise tax on gasoline and diesel fuel. This tax is often included in the price per gallon at the pump.

Discretionary and Other Taxes

Hotel Occupancy Tax: Occupancy in hotels and similar establishments is subject to an additional 15% tax.

Rental Car Surcharge: In addition to the sales tax, a surcharge is applied to car rentals.

Admissions Tax: Certain events, places of amusement, and sporting events may be subject to an admissions tax.

Luxury Tax: There's also a 7.75% luxury tax on certain items costing more than a specified amount, including luxury vehicles, jewelry, and clothing.

Connecticut Car Sales Tax: The tax rate for car sales aligns with the state's general sales tax rate of 6.35%. This means that when buying a car, both new and pre-owned, you'll be subject to a 6.35% tax on the purchase price. Additionally, certain luxury vehicles might attract higher tax rates due to the state's luxury goods tax provisions.

Other Considerations

Internet Sales: Online sellers with a significant economic presence in Connecticut are required to collect and remit sales tax.

Local Taxing Authority: While Connecticut does not allow local governments to impose additional local sales taxes, certain municipalities may have regulatory fees or other charges.

Tax Holidays: Connecticut may offer tax holidays, like a sales tax-free week on certain items such as back-to-school supplies and clothing.

Understanding nexus in Connecticut for local and out-of-state sellers

Physical nexus

In 2024, physical nexus for sales tax in Connecticut remains an essential criterion for determining tax obligations. Here are the key points compared to 2023:

2024

• They have a physical presence, such as a store or office.
• They have inventory within the state, even in third-party warehouses.
• They employ individuals working in the state.
• They conduct significant in-state events, like trade shows.

2023

• Physical presence was a requirement, encompassing stores, offices, or warehouses.
• Inventory in the state, including consignment warehouses, contributed to nexus.
• Employee presence, regardless of the role, established nexus.
• Participation in trade shows or similar events created nexus.

Economic nexus

Threshold Changes: In 2024, the threshold for economic nexus in Connecticut maintains the requirement that remote sellers must collect and remit sales tax if they surpass $100,000 in gross revenue from sales of tangible personal property, services, or digital goods delivered into Connecticut and engage in 200 or more separate transactions. This remains unchanged from 2023 values, where the same threshold applied.

Marketplace Facilitators: Connecticut continues to require marketplace facilitators to collect and remit sales tax on behalf of sellers using their platforms. The 2024 guidelines uphold the 2023 stipulation that if a marketplace facilitator meets the threshold of more than $100,000 in gross sales or 200 transactions, they must comply with the state’s tax obligations. No change occurred in these requirements from 2023 to 2024.

Enforcement: Enforcement protocols in 2024 emphasize stricter compliance checks and audits to ensure remote sellers and marketplace facilitators adhere to the nexus thresholds. This indicates a more rigorous enforcement stance than 2023, which focused more on voluntary compliance and educational initiatives for businesses.

State Guidance Updates: In 2024, Connecticut's Department of Revenue Services (DRS) has released updated guidance and FAQs to help businesses understand the complexities of economic nexus. Although guidance and educational materials existed in 2023, the 2024 updates provide more detailed explanations tailored to common business queries and recent marketplace trends.

Technology and Administration: The state has invested in better technology for monitoring and administrating sales tax compliance by remote sellers in 2024. This contrasts with 2023, where the technological upgrade was in the planning phase, intending to streamline processing and reduce manual oversight.

Affiliate nexus

In 2024, Connecticut continues to enforce affiliate nexus rules for sales tax, as outlined in the state tax code. The concept ensures that out-of-state sellers with certain connections to in-state entities must collect and remit sales tax. Compared to 2023, the 2024 affiliate nexus in Connecticut has seen several regulatory changes:

Threshold Changes

2024: The threshold for sales into Connecticut triggering nexus is set at $100,000 in gross sales within a 12-month period, or 200 separate transactions.

2023: The same threshold of $100,000 in gross sales or 200 separate transactions applied.

Affiliate Definition

2024: Affiliates include entities sharing common ownership with the out-of-state seller and engaging in similar business activities generating significant sales nexus.

2023: Affiliates were defined similarly, emphasizing common ownership and business connections.

Out-of-State Sellers

2024: The requirement for out-of-state sellers to prominently display notice to Connecticut customers regarding their tax obligations remains stringent.

2023: Notice requirements were enforced with a particular focus on transparency and notification.

Marketplace Facilitators

2024: Marketplace facilitators continue to be required to collect and remit sales tax on behalf of third-party sellers if the facilitator meets the nexus thresholds.

2023: The same obligations applied, emphasizing marketplace operations' role in tax collection.

Penalties for Non-Compliance

2024: Penalties for non-compliance with affiliate nexus provisions include fines and potential back taxes, reflecting stringent enforcement measures.

2023: Penalties were enforced similarly, maintaining a rigorous stance on compliance.

Use of Technology

2024: Connecticut also emphasizes the use of technology for tax collection and remittance, encouraging automated and streamlined reporting systems.

2023: The state had already begun pushing for tech-based solutions in tax compliance initiatives.

Nexus Law Interpretation

2024: The interpretation of nexus laws remains consistent, but enforcement mechanisms have tightened, reflecting a broader trend towards ensuring robust tax compliance among remote sellers.

2023: Interpretation was consistent, with growing emphasis on compliance.

Click-through nexus

Connecticut implemented significant changes to its click-through nexus rules for sales tax in 2024 compared to 2023, as outlined in the updated tax code. If you’ve ever wondered, 'what is CT sales tax and how does it impact online retailers?' here’s a detailed look.

Threshold Changes

In 2023, a retailer was required to collect sales tax if they earned over $250,000 from sales in Connecticut facilitated through in-state sales representatives and had 200 transactions.

In 2024, the threshold has been lowered to $100,000 with no minimum transaction count.

Scope of Applicability

The 2023 rule applied mainly to online retailers using in-state affiliates.

The 2024 updates broaden the scope to include any remote seller with direct or indirect referrals.

Enforcement and Compliance

Enforcement mechanisms in 2023 were primarily complaint-driven.

In 2024, Connecticut's Department of Revenue Services has increased audit capabilities and automated detection systems.

Documentation Requirements

Retailers in 2023 were obligated to maintain detailed records only of sales exceeding the threshold.

Under 2024 rules, all sales facilitated by affiliates, regardless of amount, must be documented.

Penalties for Non-Compliance

Initial penalties in 2023 involved monetary fines up to $10,000.

In 2024, penalties escalated to include additional fines, potential business operation restrictions, and public disclosure of non-compliant entities.

Marketplace nexus

In 2024, Connecticut has established new marketplace nexus changes for sales tax as compared to 2023:

Registration Requirements: In 2023, marketplace facilitators with sales exceeding $100,000 or 200 transactions had to register for sales tax collection. For 2024, the threshold has been uniformly adjusted to $100,000 in gross sales with the transaction count criterion eliminated.

Tax Collection: During 2023, facilitators with nexus were required to collect and remit sales tax on behalf of their third-party sellers. This requirement remains unchanged in 2024, with facilitators continuing to bear primary responsibility for tax collection.

Reporting Obligations: For 2024, administrative reporting obligations have been streamlined slightly to reduce the frequency of detailed reports while maintaining quarterly submissions. In 2023, more frequent detailed reporting was mandated.

Penalties for Non-Compliance: The penalty structure remains similar in 2024 compared to 2023. However, enforcement measures have been intensified with increased audits and stricter fines for non-compliance instances.

Exemption Criteria: Both 2023 and 2024 maintain certain exemptions for small sellers who fall below the threshold for a nexus. These exemptions apply similarly over both years.

Remittance Frequency: Monthly remittances were required for facilitators in 2023, and this continues in 2024 without change.

Technology and Infrastructure: In 2024, an emphasis on technology has increased, with the state providing more robust digital tools for compliance, which could help streamline handling property tax as well, contrasting with 2023 where less emphasis was placed on tech-enabled compliance solutions.

Trade shows

In 2024, Connecticut imposes specific sales tax obligations for vendors participating in trade shows, detailing the sales tax Connecticut mandates in such events:

Registration: All tradeshow vendors must register for a Connecticut Sales and Use Tax Permit before making sales. This applies even if the vendor is from out-of-state.

Collection: Vendors are required to collect Connecticut sales tax on all taxable sales made during the tradeshow. The current sales tax rate in Connecticut is 6.35%.

Filing: Sales must be reported and taxes remitted to the Connecticut Department of Revenue Services (DRS) by the applicable due date, which varies based on the vendor's annual sales volume.

Exemptions: Certain items, such as most food products and some clothing, may be exempt from sales tax. Vendors should familiarize themselves with these exemptions.

Display Requirements: Vendors must clearly display their Connecticut Sales and Use Tax Permit at their tradeshow booth.

Record Keeping: Vendors are required to keep detailed records of all sales transactions and exemptions for at least three years for audit purposes by the DRS.

Non-Compliance: Failure to comply with these sales tax obligations can result in penalties, interest on unpaid taxes, and potential revocation of the sales tax permit.

Application: The application for a Sales and Use Tax Permit can be completed online through the DRS website.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service where Amazon handles storage, packing, and shipping of products on behalf of sellers. Sellers send their inventory to Amazon's fulfillment centers, and Amazon manages the logistics, allowing sellers to leverage Amazon's extensive distribution network.

Understanding FBA

• Sellers send their inventory to Amazon's fulfillment centers.
• Amazon stores, picks, packs, and ships products to customers.
• Amazon handles customer service and returns for FBA items.
• Sellers gain access to Amazon’s Prime customer base, potentially increasing sales.
• Fees include storage, fulfillment, and optional services like labeling and inventory preparation.

Sales Tax Obligations in Connecticut (2024)

• Connecticut imposes a state sales tax of 6.35% on retail sales.
• Remote sellers, including those using FBA, may need to collect sales tax if their gross revenue exceeds $100,000 or they make 200 or more transactions annually in the state.
• Effective January 1, 2024, marketplace facilitators like Amazon are required to collect and remit sales tax on behalf of third-party sellers for sales delivered to Connecticut customers.
• Sellers should maintain accurate records of sales transactions and tax remitted.
• Failing to comply with tax obligations may result in penalties and interest charges.
• Annual or quarterly sales tax returns must be filed with the Connecticut Department of Revenue Services, depending on the seller’s tax liability.

Permits, certificates and sales tax registration in Connecticut

To register for sales tax in Connecticut for 2024, you'll need to gather key business information such as your federal Employer Identification Number (EIN), business name, and contact details.

Register online through the Connecticut Department of Revenue Services (DRS). Ensure you have details about your business structure, ownership, and sales activities.

Once submitted, you’ll receive a Sales and Use Tax Permit, allowing you to legally collect and remit sales tax in the state.

Registering for sales tax collection in Connecticut

To register for sales tax collection in Connecticut in 2024, you need to follow these steps:

Determine Your Responsibility: Confirm that your business activities require you to collect sales tax. If you are selling tangible personal property, digital goods, or certain services within Connecticut, you may need to collect sales tax.

Prepare Your Business Information: Gather all necessary information about your business, including your Federal Employer Identification Number (FEIN), business name, physical and mailing address, contact information, and details about the nature of your business.

Register Your Business: Go to the Connecticut Department of Revenue Services (DRS) website to access the electronic Taxpayer Service Center (TSC) or call their office for assistance. In the TSC, you’ll find the registration option to sign up for a sales tax permit.

Complete the Registration Application: Fill out the application form with all the required details. This will include information about your business and the types of products or services you will be selling.

Submit Your Application: After completing the application, submit it through the TSC. Make sure to review all the information for accuracy before submission.

Pay the Registration Fee: There may be a one-time fee associated with registering for a sales tax permit in Connecticut. Ensure you have a payment method ready to cover this fee.

Receive Your Sales Tax Permit: Once your application is processed and approved, you will receive your sales tax permit. This permit authorizes you to collect sales tax from your customers.

Collect and Remit Sales Tax: Start collecting the appropriate sales tax from your customers on taxable sales. You must remit the collected sales tax to the Connecticut Department of Revenue Services on the schedule specified (monthly, quarterly, etc.).

File Regular Sales Tax Returns: Stay compliant by filing sales tax returns regularly. These returns can also be filed through the Taxpayer Service Center. Make sure to report and pay the sales tax collected.

Cost of registering for sales tax in Connecticut in 2024

In Connecticut, there is no fee for registering for a Sales and Use Tax Permit in 2024.

Businesses can apply for this permit through the Connecticut Department of Revenue Services (DRS). The registration process is necessary for businesses that sell tangible personal property or certain services in Connecticut. It is important to ensure that your business is registered before you begin operations.

Federal tax ID requirements for registering

Yes, you will generally need an Employer Identification Number (EIN) when registering for sales tax in Connecticut. An EIN is necessary for most business tax filings with the IRS and state tax authorities.

To apply for an EIN, you can do so directly through the IRS website. Here is the link to apply for an EIN: Apply for an EIN online

For registering for sales tax in Connecticut, you can do so on the Connecticut Department of Revenue Services (DRS) website. You will need to create an account to register for sales and use tax. Here’s the link to the registration page: Connecticut DRS - Taxpayer Service Center

Be sure to have your EIN and other business details ready when you start the registration process.

Streamlined sales tax program and Connecticut

As of 2023, Connecticut is not a member of the Streamlined Sales Tax (SST) Agreement.

The SST is an initiative aimed at simplifying and modernizing sales tax administration to encourage voluntary compliance and ease the burden on businesses.

However, tax laws and states' participation in such programs can change. For the most current information, it's recommended to check with the Connecticut Department of Revenue Services or the Streamlined Sales Tax Governing Board.

Acquiring a business and registering for sales tax in Connecticut

If you're acquiring a business in Connecticut and need to register for sales tax, follow these general steps:

Obtain a Connecticut Tax Registration Number

Visit the Connecticut Department of Revenue Services (DRS) to register your business. This is necessary to obtain a Sales and Use Tax Permit.

This can usually be done online via the DRS website or by submitting paper forms.

Provide Business Details

You will need to provide specific information about your business, including:

• The legal name of the business
• The type of entity (e.g., LLC, corporation, sole proprietorship)
• Federal Employer Identification Number (FEIN) or Social Security Number (SSN) if a sole proprietor
• Business address and contact information
• Details about the nature of the business and types of products or services sold

Specify the Acquisition Details

Clearly indicate that you have acquired an existing business. Provide information about the previous owner and the date of acquisition. If applicable, ensure that any back taxes or outstanding sales tax liabilities from the previous owner are settled or addressed.

Documentation

Prepare to provide necessary documentation, such as acquisition agreements, proof of identity, and any other documents the DRS may require to review your application comprehensively.

Sales and Use Tax Permit

Once you have registered for a Connecticut Tax Registration Number, you will receive a Sales and Use Tax Permit. The permit must be prominently displayed at your place of business.

Tax Returns and Payments

Understand your obligations for filing sales tax returns and making payments. Connecticut typically requires businesses to file sales tax returns either monthly, quarterly, or annually, depending on the volume of sales.

Additional Licenses and Permits

Depending on your business type, you might need additional state or local licenses and permits. Ensure you have all necessary permissions to operate your business legally.

Other Connecticut registrations to consider

In Connecticut, alongside sales tax registration, there are several other registrations and permits you might need to consider depending on the nature of your business in 2024. Each business is unique, so it's important to assess your specific situation to determine the exact registrations and permits you will need.

Business Entity Registration: If you're forming a corporation, limited liability company (LLC), partnership, or other legal business entity, you'll need to register with the Connecticut Secretary of the State.

Employer Identification Number (EIN): If your business has employees or is a partnership or corporation, you will need to obtain an EIN from the IRS.

State Employer Registration: If you have employees, you must register with the Connecticut Department of Labor for unemployment insurance purposes and with the Connecticut Department of Revenue Services for employee withholding tax.

Local Business Licenses and Permits: Depending on your business location and type, you may need to obtain local business licenses or permits from the city or town where your business operates. This can include zoning permits, health permits for food-related businesses, and professional licenses for certain occupations.

Trade Name Registration: If you're operating under a name other than your legal business name, you may need to register your trade name (also known as a "doing business as" or DBA name) with the town clerk in the town where your business is located.

Resale Certificate: If you are purchasing goods for resale, you need to obtain a resale certificate to provide to your suppliers, which allows you to purchase items tax-free.

Specialty Licenses and Permits: Some businesses require specialized licenses or permits, such as those for alcohol sales, child care, construction, and more. You should check if your specific industry has additional requirements.

Environmental Compliance: Depending on your business activities, you may need to comply with certain environmental regulations and obtain permits from the Connecticut Department of Energy and Environmental Protection.

Requirements for online sellers in Connecticut

Yes, online sellers in Connecticut have specific requirements for sales tax collection. As of 2024, these include the following:

Economic Nexus: If your online sales exceed $100,000 in gross revenue or involve 200 or more separate transactions into Connecticut during the previous or current calendar year, you are required to collect and remit sales tax.

Marketplace Facilitators: Online marketplaces that facilitate sales for third-party sellers may have the obligation to collect and remit sales tax on behalf of those sellers, provided they meet the economic nexus thresholds.

Registration: Sellers meeting the nexus criteria must register with the Connecticut Department of Revenue Services and obtain a Sales and Use Tax Permit.

Compliance: Registered sellers must collect sales tax at the applicable rate for the goods or services sold online and remit it to the Connecticut Department of Revenue Services. They must also file periodic sales tax returns, typically on a monthly, quarterly, or annual basis depending on the volume of sales.

Record-Keeping: Maintaining accurate records of all transactions, sales tax collected, and remitted is crucial for compliance and for future audits by the state.

Collecting sales tax in Connecticut

In 2024, businesses in Connecticut must use updated sales tax regulations to ensure compliance.

Collecting sales tax involves understanding applicable rates, exemptions, and filing deadlines. By adhering to state guidelines and leveraging available resources, businesses can smoothly manage their tax obligations and avoid potential legal complications.

Understanding origin vs. destination sales tax collection

Connecticut is a destination-based sales tax jurisdiction. This means that sales tax is collected based on the location where the buyer takes possession of the purchased item or service.

For more information, you can visit the official website of the Connecticut Department of Revenue Services at https://portal.ct.gov/DRS.

Taxable products in Connecticut

In Connecticut, sales tax is applied to a wide range of goods and services. As of 2024, the state has specific guidelines on which product genres are subject to sales tax. Here's an overview:

General Merchandise

Clothing and Footwear: Clothing and footwear under $50 per item are exempt, but items above this threshold are taxable.

Groceries: Most grocery items are exempt, but prepared foods, candy, and non-essential items may be taxed.

Furniture and Home Goods: Sales tax applies to most furniture, home appliances, and decor items.

Electronics: Sales tax is charged on electronics such as televisions, computers, and smartphones.

Automobiles and Motorcycles: These are subject to sales tax, including any relevant accessories.

Services

Personal Services: Haircuts, spa treatments, and other personal care services are generally taxable.

Repair Services: Labor for repairing items like cars and appliances is generally taxed.

Professional Services: Certain professional services, such as legal and accounting services, may be exempt, but consulting services often incur sales tax.

Digital Goods and Services

Digital Downloads: E-books, music downloads, and video downloads are subject to sales tax.

Subscription Services: Streaming services (e.g., Netflix, Spotify) and digital subscriptions are typically taxed.

Entertainment and Recreation

Tickets: Admission to events such as concerts, movies, and sports games incur sales tax.

Membership Fees: Fees for health clubs, country clubs, and similar memberships are often taxable.

Special Categories

Alcoholic Beverages: Sales tax applies to the purchase of beer, wine, and spirits.

Cigarettes and Tobacco Products: These are subject not only to sales tax but also to additional excise taxes.

Exceptions and Exemptions

Medical Supplies and Equipment: Many medical supplies and prescription medications are exempt from sales tax.

Educational Materials: Textbooks for educational purposes may be exempt.

Non-taxable products in Connecticut

In the state of Connecticut, several types of products are exempt from sales tax. For the most current information and to verify the tax status of specific items, please refer to the Connecticut Department of Revenue Services.

As of 2024, the following categories are included, but please note that this is subject to change:

Food Products: Most grocery food items are generally exempt from sales tax. However, prepared foods and certain sugary drinks may be taxable.

Clothing and Footwear: Items of clothing and footwear costing less than $100 are exempt.

Prescription Medications and Medical Equipment: Prescription drugs, over-the-counter medicines, and certain medical equipment for home use are exempt.

Newspapers and Magazines: Printed newspapers and some subscription magazines are exempt.

Utilities: Residential use of electricity, gas, and heating fuel is often exempt.

Agricultural Supplies: Certain products used in agriculture, such as seeds, fertilizers, and feed, are exempt.

Manufacturing Equipment: Machinery and equipment used directly in manufacturing processes are generally exempt.

Is SaaS taxable in Connecticut?

Yes, in Connecticut, as of 2024, SaaS (Software as a Service) is generally considered taxable.

This follows the trend of treating digital goods and services provided electronically as taxable items. Businesses offering SaaS in Connecticut should be aware of the relevant tax obligations and ensure compliance with state sales tax regulations.

Are digital products taxable in Connecticut?

Yes, in Connecticut, digital products such as software, e-books, and digital music are generally subject to sales and use tax in 2024.

This encompasses goods delivered electronically, including streamed or downloaded content. Certain exemptions may apply based on specific criteria or usage. It's recommended to consult with a tax professional for detailed guidance.

Are services taxable in Connecticut?

In Connecticut, the taxation of services varies depending on the type of service provided.

Many professional and personal services, such as legal and accounting services, are generally subject to sales tax. However, some services such as medical, educational, and certain labor services may be exempt. Always check the current tax regulations for specific details.

Sales tax exemption certificates

A sales tax exemption certificate in Connecticut allows certain purchases to be made without paying state sales tax. Entities that may qualify include nonprofits, government agencies, and resellers purchasing goods for resale.

The buyer must present a valid exemption certificate to the seller at the time of purchase, indicating the reason for the tax exemption. The seller is responsible for maintaining records of these certificates to validate the tax-exempt sale.

Misusing or failing to properly document these transactions can result in penalties. Certificates often require periodic renewal and must comply with Connecticut's Department of Revenue Services regulations.

State tax holidays in Connecticut for 2024

Sales tax holidays are designated periods when sales taxes on certain items are temporarily suspended. In Connecticut, there are no specific sales tax holidays scheduled for 2024.

Filing sales tax returns in Connecticut

In Connecticut, filing sales taxes involves several steps to ensure compliance with state regulations. Here’s a concise guide:

Register for a Sales Tax Permit: Visit the Connecticut Department of Revenue Services (DRS) website to register your business and obtain a Sales and Use Tax Permit.

Collect Sales Tax: Charge the appropriate sales tax rate on all taxable sales, which can vary by location.

Track Sales: Keep detailed records of all sales and the taxes collected to ensure accurate reporting.

File Sales Tax Returns: File returns either monthly, quarterly, or annually, based on your business’s tax liability.

Due Dates: Monthly returns are due on the 20th of the following month. Quarterly returns are due by the last day of the month following the end of the quarter. Annual returns are due January 31st of the following year.

Electronic Filing: Use the Taxpayer Service Center (TSC) online portal to file and pay your sales tax returns.

Remit Sales Tax: Pay the collected sales tax to the Connecticut DRS through the TSC.

Late Payments: If you miss the filing or payment deadline, penalties and interest may apply.

Keep Records: Maintain all sales tax records for at least six years for potential audits.

Reconcile Accounts: Regularly reconcile your sales records with your returns to ensure accuracy.

Sales tax filing frequency

In the state of Connecticut, businesses are generally required to file sales tax returns either monthly, quarterly, or annually. The Connecticut Department of Revenue Services (DRS) determines the filing frequency based on the business's annual tax liability.

Monthly Filing: Businesses with a higher volume of taxable sales are generally required to file their sales tax returns on a monthly basis. This is typically the case if the business’s annual sales tax liability exceeds a certain amount, ensuring that the state receives tax revenue in a more timely manner.

Quarterly Filing: Businesses with moderate levels of taxable sales may be eligible to file their sales tax returns quarterly. This is a common filing frequency for businesses whose annual tax liability falls below the threshold required for monthly filings but is still significant.

Annual Filing: Smaller businesses, or those with minimal taxable sales, may be allowed to file their sales tax returns on an annual basis. This typically applies to businesses whose annual sales tax liability is relatively low, reducing the administrative burden of more frequent filings.

The DRS reviews each business's reported sales and tax liabilities and assigns the appropriate filing frequency. It's important to note that businesses are required to remit sales tax at the time of each filing, regardless of the frequency assigned.

Additionally, businesses must ensure that they comply with the assigned filing frequency and due dates to avoid potential penalties and interest for late payments or filings. Watching for any notifications from the DRS regarding changes in filing frequency is critical, as non-compliance can result in financial and legal consequences.

Filing when no sales tax has been collected

In Connecticut, if a registered business fails to collect sales tax on taxable sales in 2024, it remains liable for the unpaid tax.

The Department of Revenue Services (DRS) will assess the owed amount, including interest and penalties. Businesses must maintain accurate records of all sales. Non-compliance can lead to audits, fines, and potential legal action.

Penalties for late filing and non-payment of sales taxes

Late sales tax filing can result in penalties and interest charges. If a business misses its filing deadline, it will typically incur a penalty of $50 or 15% of the tax due, whichever is greater. Additionally, interest accrues on the unpaid tax at a rate of 1% per month from the original due date until the tax is paid.

Non-payment of sales taxes is treated seriously in Connecticut. Businesses that fail to remit the collected sales tax face stringent penalties. Initially, a $50 non-payment penalty or 15% of the owed tax, whichever is greater, is levied.

Continued non-payment escalates the repercussions, including accruing interest charges at 1% per month. Persistent delinquency can lead to severe consequences such as tax liens, seizure of business assets, or even the revocation of the business’s sales tax permit.

For both late filing and non-payment, businesses may also face additional compliance actions from the state’s Department of Revenue Services. It's vital for businesses to ensure timely and accurate filing and payment of sales taxes to avoid financial burdens and legal issues.

Sales tax discounts and incentives

In Connecticut for the year 2024, businesses can take advantage of several sales tax incentives and discounts aimed at fostering economic growth and development.

Tax Exemptions for Manufacturing: Machinery and equipment used in the manufacturing process are typically exempt from sales tax. This encourages businesses to invest in new technologies and maintain a competitive edge.

Urban and Industrial Site Reinvestment Tax Credit: This incentive is available for businesses that undertake significant investment projects in urban and industrial areas. It aims to revitalize these areas and spur economic activity while offering substantial tax credits over a series of years.

Research and Development Tax Credit: Companies engaging in R&D activities can benefit from tax credits to offset a portion of their expenses. This promotes innovation and long-term economic growth.

Job Creation Incentives: Certain programs provide tax incentives to businesses that create new jobs within the state. These programs target sectors with high growth potential and aim to reduce unemployment rates.

Green Energy and Efficiency Incentives: Businesses investing in green technologies or energy-efficient upgrades often qualify for various sales tax exemptions and rebates, encouraging a more sustainable business environment.

Small Business Assistance: Connecticut offers sales tax relief programs tailored specifically for small businesses. These may include reduced rates or exemptions on specific types of business activity to help small enterprises thrive.

2024 sales tax filing due dates for Connecticut

Coming soon.

Shipping and sales tax in Connecticut

When to pay tax on shipping in Connecticut

In Connecticut, sales tax on shipping and delivery charges depends on whether the shipping charge is considered part of the sale. According to the Connecticut Department of Revenue Services:

Shipping Charges Part of the Sale

If shipping charges are included in the total sales price of taxable goods, then sales tax must be charged on the entire amount, including the shipping.

Separately Stated Shipping Charges

If shipping charges are separately stated from the sales price of taxable goods, they are generally not subject to sales tax.

Therefore, a business in Connecticut would pay sales tax on shipping if the shipping charges are not separately stated from the sale of taxable goods. If the charges are separately stated, then no sales tax applies to the shipping costs.