Connecticut Sales and Use Tax: Rates, Permits & Filing

The Connecticut sales and use tax is a 6.35% tax on most retail purchases, with higher rates for luxury goods (7.75%), short-term car rentals (9.35%), and hotel stays (15%), and lower rates for a few categories like boats (2.99%) and computer and data processing services (1%). The Department of Revenue Services (DRS) administers both pieces: retailers collect sales tax at the register, and buyers owe use tax directly when a seller — often an out-of-state online vendor — doesn’t charge Connecticut tax. Groceries for home use and prescription medications are exempt. Clothing is not.

Rates by Category

The 6.35% base rate covers most tangible goods and taxable services.¹ Several categories carry different rates, and the differences are large enough to matter:

Luxury goods at 7.75%: motor vehicles priced above $50,000, jewelry over $5,000, and clothing, footwear, handbags, or watches over $1,000. The higher rate applies to the entire price, not just the amount above the threshold. A $51,000 car is taxed at 7.75% on the full $51,000.¹
Short-term car rentals at 9.35%, for passenger vehicles rented for 30 consecutive days or fewer.²
Hotel and lodging at 15% for stays of up to 30 days. Bed and breakfast establishments are taxed at 11%.¹
Boats and marine equipment at 2.99%: vessels, vessel motors, trailers for transporting vessels, and dyed diesel fuel sold at marine fuel docks.¹
Computer and data processing services at 1%, covering work like custom programming, systems integration, and online professional or academic research databases.¹
Active-duty service members on full-time duty in Connecticut but considered residents of another state pay a reduced 4.5% rate on motor vehicle purchases.¹

What’s Exempt

Connecticut exempts groceries intended for home consumption, including meat, dairy, produce, bread, and eggs. Prepared meals from restaurants, cafeterias, and food trucks remain taxable, and the statute defines “meal” broadly enough to include a deli sandwich wrapped to go.³

Prescription medications, syringes, and needles prescribed by a provider are exempt.³ Over-the-counter supplements, tonics, and dietary pills are not. The line is whether federal or state law requires a prescription.

Clothing is not broadly exempt. All clothing is taxable at the standard 6.35% rate unless an item costs more than $1,000, at which point the 7.75% luxury rate applies to the full price.¹ The legislature has periodically authorized a temporary “Sales Tax Free Week” exempting clothing under $100, but that event depends on annual legislative action and isn’t permanent.

Sales to the federal government and qualifying nonprofits are exempt when the buyer provides a valid exemption certificate at purchase. Manufacturing materials and some industrial inputs can be exempt depending on how the goods are used in production.

Digital Goods and Software

Since October 2019, digital downloads of music, videos, e-books, and ringtones are taxed at the standard 6.35% rate. Older guidance may show the 1% computer services rate, which no longer applies to these consumer downloads.⁴

Prewritten software bought electronically is also 6.35% for consumer purchases. If a business buys prewritten software for its own use, the 1% rate still applies, and the business must provide its name, address, and a statement that the software is for business use. An enterprise purchase agreement is generally enough documentation on its own.⁴

Newspapers, magazines sold by subscription, and college textbooks are exempt in physical or digital form. Access to online professional or academic research databases is taxable at 1%.⁴

When You Owe Use Tax as an Individual

If you buy something online or out of state for personal use and the seller doesn’t charge Connecticut sales tax, you owe use tax on that purchase. This comes up most often with smaller online retailers that don’t collect Connecticut tax. Large platforms usually handle it through the marketplace rules below, but independent websites and private sellers often don’t.

You can report use tax on your Connecticut income tax return using Form CT-1040. If you aren’t required to file a state income tax return, use Form OP-186 instead, due by April 15. One OP-186 can cover the full year, or you can file several throughout the year. Businesses report use tax on their regular Form OS-114.

The penalty for individuals who skip use tax reporting is 10% of the tax owed plus interest at 1% per month from the due date until payment.⁵

Registering for a Sales and Use Tax Permit

Any business with sufficient connection to Connecticut must register for a Sales and Use Tax Permit before making its first taxable sale. Physical nexus exists when a company has an office, warehouse, employees, or sales representatives in the state. Economic nexus applies to remote sellers who exceed $100,000 in gross receipts and 200 separate transactions within a twelve-month period ending September 30.⁶ Both taxable and exempt sales count toward the thresholds; sales for resale do not.

The permit costs $100 and must be renewed every two years. Operating without one is a criminal offense carrying fines of up to $500 or up to three months of imprisonment per violation.⁷

Filing Your Return

Every registered business must file Form OS-114 even if it made no sales and owes no tax for the period. DRS assigns a filing frequency of monthly, quarterly, or annual based on expected sales volume. The return is due on or before the last day of the month following the end of the filing period. If that date falls on a weekend or legal holiday, the deadline shifts to the next business day.⁸

The return starts with total gross receipts from all sales, including nontaxable ones. You then subtract deductions for exempt sales, resale transactions, and other nontaxable items to reach the taxable amount. Labor charges for services need to be separated from parts or materials because the tax treatment can differ.

All returns are filed through the myconneCT portal, which replaced the older Taxpayer Service Center. You’ll need new login credentials; old TSC logins don’t carry over.⁹ Payment is typically made by ACH debit from a linked bank account. If you file electronically, you must also pay electronically. The portal lets you schedule payments ahead of the due date and generates a confirmation once the return is accepted.

Keep sales tax records for at least three years from the extended due date of the return.¹⁰ That’s a floor. Many accountants recommend longer as a practical buffer.

Selling Through a Marketplace

If you sell through a platform like Amazon, Etsy, or eBay, the platform likely handles your sales tax. Under Conn. Gen. Stat. § 12-408e, a marketplace facilitator that processed at least $250,000 in retail sales during the prior twelve-month period must register with DRS, collect sales tax on every taxable sale it facilitates, and remit the tax as if it were the retailer.¹¹

The platform bears the audit risk on those sales. If DRS finds the facilitator undercollected, the facilitator is on the hook, not the individual seller. The exception is when the seller fed the platform incorrect information about the product or its taxability.¹¹

Marketplace sellers who hold their own Connecticut permit can avoid double-collecting by showing either a contract where the facilitator agrees to handle sales tax, or a certificate of collection from the facilitator confirming it is registered and will collect on the seller’s behalf. When those conditions are met, the seller can exclude the platform-facilitated sales from its own return.¹¹

Resale and Exemption Certificates

When a customer claims a sale is exempt or for resale, the seller has to collect and keep the documentation. For resale transactions, the buyer must provide a properly completed Connecticut Sales and Use Tax Resale Certificate at the time of sale. Without it, the full amount is presumed taxable, and DRS will hold the seller responsible for the uncollected tax on audit.¹²

Exempt organizations buying meals or lodging must provide specific DRS certificates. Form CERT-119 is presented at the time of sale with a copy of the organization’s federal determination letter attached. Blanket certificates like CERT-123 require pre-approval from DRS and expire one year from approval.¹³ These forms stay with the seller in case of audit; they are not sent to DRS.

Late Filing Penalties

A business that misses its deadline owes a penalty of 15% of the tax due or $50, whichever is greater, plus interest at 1% per month from the original due date until payment.⁵ The 1% is calculated on any fraction of a month, so slipping one day into a new month adds another full point.

Individuals owing use tax face a 10% penalty with the same 1% monthly interest.⁵ Penalties sit on top of the underlying tax. A business that owed $2,000 and paid six months late would owe $2,000 in tax plus $300 in penalty plus $120 in interest.

Disputing an Audit Assessment

If DRS audits your returns and issues an assessment you disagree with, you have 60 days from the date of the first formal billing notice to request a hearing with the Appellate Division. The request must be in writing and include your registration number, the audit control number, the periods in question, and a detailed explanation of which adjustments you’re contesting and why.¹⁴

An Appellate Officer schedules a hearing, reviews new documentation, and issues a Final Determination Letter. Interest continues to accrue on the disputed amount throughout; a deposit in the nature of a cash bond can limit that exposure while the appeal is pending.¹⁴

If the result still doesn’t resolve the dispute, you have one month from the date of the Final Determination Letter to file an appeal with the Connecticut Superior Court.¹⁴ That window is short; mark the calendar the day the letter arrives.

Successor Liability When Buying a Business

Anyone purchasing an existing Connecticut business should know about successor liability before closing. Under state law, the buyer of a business is personally liable for the seller’s unpaid sales and use tax debts, up to the full purchase price, unless the buyer obtains a tax clearance certificate from DRS first.¹⁵

DRS recommends requesting the clearance at least 90 days before closing. The request has to go by registered or certified mail and include both parties’ tax registration numbers, a signed letter of intent, a copy of the purchase agreement, the purchase price, and the expected closing date. Hand-delivered, emailed, and faxed requests are not accepted.¹⁵

Once DRS has everything it needs, it has 60 days to either issue the clearance certificate or send an escrow letter detailing the seller’s outstanding liability. If DRS doesn’t respond within 60 days, the buyer is released from successor liability. A buyer who closes without the certificate can end up paying the seller’s back taxes on top of the purchase price.¹⁵

1
Justia. Connecticut Code 12-408 – The Sales Tax
2
Connecticut Open Data. Connecticut Sales and Use Tax at 9.35%
3
Justia. Connecticut Code 12-412 – Exemptions
4
Connecticut Department of Revenue Services. SN 2019(8) Sales and Use Taxes on Digital Goods and Canned or Prewritten Software
5
Justia. Connecticut Code 12-419 – Interest and Penalties
6
Justia. Connecticut Code 12-407 – Definitions
7
Justia. Connecticut Code 12-409 – Permits
8
Connecticut Department of Revenue Services. Instructions for Form OS-114 Sales and Use Tax Return
9
Connecticut Department of Revenue Services. myconneCT
10
Connecticut eRegulations. Sec. 12-2-12. Recordkeeping and Record Retention
11
Connecticut General Assembly. Chapter 219 – Sales and Use Taxes
12
Connecticut Department of Revenue Services. IP 2009(15), Notice to Retailers on Sales and Use Tax Resale Certificates
13
Connecticut Department of Revenue Services. Managing Exempt Status
14
Connecticut Department of Revenue Services. PS 92(4.2), Your Rights as a Connecticut Taxpayer
15
Connecticut Department of Revenue Services. IP 2002(16), Successor Liability for Sales and Use Tax, Admissions and Dues Tax