Suffield CT Sales Tax:
What Businesses Must Know

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.

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.

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.

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.

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.

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.

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.

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.