Connecticut’s sales and use tax is 6.35% on most retail purchases, applied uniformly across the state because cities and towns are not allowed to add their own local rates.1Streamlined Sales Tax Governing Board. Connecticut The Department of Revenue Services (DRS) administers the tax. The flat rate makes the basics simple, but Connecticut layers higher rates onto certain purchases and taxes a specific list of services, so what you actually owe depends on what you’re buying.
The Rate Tiers
The 6.35% base rate covers most tangible personal property and the services the statute makes taxable.2Justia. Connecticut Code 12-408 – The Sales Tax Three categories pay more:
- Luxury rate of 7.75% on motor vehicles priced above $50,000, jewelry over $5,000, and clothing, footwear, handbags, luggage, umbrellas, wallets, and watches over $1,000. The higher rate applies to the entire sales price, not just the amount above the threshold.3Connecticut State Department of Revenue Services. Individual Use Tax Information
- Meals rate of 7.35% on anything sold by restaurants, caterers, and similar establishments, which is the base 6.35% plus an additional 1%.4Connecticut Department of Revenue Services. PS 2019(5) – Sales and Use Taxes on Meals
- Short-term vehicle rental rate of 9.35% when a passenger vehicle is rented for 30 consecutive calendar days or fewer.5Connecticut State Department of Revenue Services. Sales and Use Tax Information
A $6,000 watch sold at 6.35% instead of 7.75% leaves the retailer owing the difference plus interest once DRS catches it.
What’s Taxable and What’s Exempt
Electronics, furniture, household goods, clothing, and footwear are all taxable at the point of sale.2Justia. Connecticut Code 12-408 – The Sales Tax The exemptions concentrate on necessities.
Food for home consumption is exempt, including produce, dairy, and bread. The exemption does not cover meals, candy, carbonated beverages, or alcoholic drinks.6Legal Information Institute. Conn. Agencies Regs. 12-426-29 – Exemption of Food Products for Human Consumption The distinction turns on whether the food is ready to eat. Frozen chicken from the supermarket aisle is exempt. A rotisserie chicken from the deli counter is a meal, taxed at 7.35%.
Medical items get broad exemptions. Prescription medications, syringes, needles, oxygen for medical use, blood and blood plasma, and prosthetic devices designed for a specific individual are not taxed.7Connecticut State Department of Revenue Services. Statutory Exemptions for Certain Sales Hearing aids, canes, crutches, walkers, wheelchairs, kidney dialysis machines, and oxygen supply systems are also exempt.8Legal Information Institute. Conn. Agencies Regs. 12-426-14 – Oxygen, Blood, Artificial Devices and Aids, Crutches and Wheelchairs
Digital Goods and Software
Streaming music, downloading an e-book, and buying a video game code all trigger the 6.35% rate. Since October 2019, Connecticut has treated digital audio, video, reading materials, and ringtones the same whether downloaded or streamed, and whether purchased by subscription, individually, or through an in-app transaction.9Connecticut Department of Revenue Services. SN 2019(8) – Sales and Use Taxes on Digital Goods and Canned or Prewritten Software
Software is split. Canned or prewritten software sold to an individual for personal use is taxed at 6.35%. The same software sold to a business for business use is taxed at 1%, because business-use software falls under computer and data processing services.9Connecticut Department of Revenue Services. SN 2019(8) – Sales and Use Taxes on Digital Goods and Canned or Prewritten Software Custom software built for a specific business is also at 1%. The seller needs to know who the buyer is and how the software will be used before applying a rate.
Which Services Are Taxed
Connecticut taxes services only if the statute names them. Anything not on the list is generally exempt, which is why professional services like legal advice, accounting, and healthcare carry no sales tax.10Justia. Connecticut Code 12-407 – Definitions
Taxable categories include computer and data processing, business consulting and management services, services performed on commercial property (electrical, plumbing, painting, carpentry, property management), motor vehicle repair, security and private investigation services, staffing and employment agencies, credit reporting, photographic studios, telephone answering, and painting and lettering.
One carve-out matters for homeowners: work done on an owner-occupied residential property with three or fewer units is not taxable.10Justia. Connecticut Code 12-407 – Definitions A plumber fixing a toilet in your house charges no sales tax. The same plumber fixing a toilet in an office building does.
Use Tax on Out-of-State Purchases
When you buy something from a seller that doesn’t collect Connecticut sales tax, you owe use tax at the same rate the sale would have carried in state. Use tax applies to online purchases, mail-order goods, and items you bring back from another state for use here.3Connecticut State Department of Revenue Services. Individual Use Tax Information
Individuals report use tax on their Connecticut income tax return (Form CT-1040) for purchases made during the preceding calendar year. If you don’t have to file a return, you can file Form OP-186 separately.3Connecticut State Department of Revenue Services. Individual Use Tax Information The rate tiers follow you. A $7,000 piece of jewelry bought from an uncollecting out-of-state seller owes 7.75% use tax, not 6.35%.
Registering as a Seller
Any business making retail sales of taxable goods or services in Connecticut must register for a Sales and Use Tax Permit before the first sale. Registration goes through the myconneCT portal using Form REG-1, the Business Taxes Registration Application; paper filings are no longer accepted.11Connecticut State Department of Revenue Services. Applications/Registration Applications You’ll need your federal EIN (or Social Security Number for sole proprietors), your NAICS code, a physical business address, and your start date.12Business.CT.gov. Register Your Business
Businesses buying goods purely for resale can give suppliers a resale certificate to avoid tax at the wholesale level. Specialized certificates cover other uses, such as CERT-100 for materials, tools, and fuel used in manufacturing. Using a certificate improperly has teeth. If you buy something tax-free for resale and then use it in your business, you owe use tax on the full purchase price, and willfully submitting a false exemption certificate can bring a fine of up to $5,000, up to five years in prison, or both.
Filing and Payment
Returns are filed online through myconneCT.13Connecticut State Department of Revenue Services. myconneCT DRS assigns your filing frequency based on how much tax you collect: monthly for higher liabilities, quarterly for moderate ones, annually for the smallest. Whatever your frequency, the return is due on or before the last day of the month following the end of the filing period.5Connecticut State Department of Revenue Services. Sales and Use Tax Information January collections for a monthly filer are due by the last day of February.
Missing a deadline brings a penalty of 10% of the tax due or $50, whichever is greater.14Justia. Connecticut Code 12-735 – Failure to Pay Tax or Make Return Interest runs on top at 1% per month (or fraction of a month) until the balance is paid. A business that owes $5,000 and files three months late faces $500 in penalty plus $150 in interest. Businesses required to pay electronically that fail to do so face a separate penalty: 10% of the payment, capped at $2,500 for a first offense, $10,000 for a second, and uncapped after that.
Keep your records at least three years from the extended due date of the return, which is the minimum DRS requires.15Connecticut eRegulations. Sec. 12-2-12 – Recordkeeping and Record Retention Six years is safer, especially for exemption certificates.
Remote Sellers and Marketplace Platforms
Out-of-state businesses selling into Connecticut can be required to collect Connecticut sales tax even without a physical presence here. Connecticut applies the economic nexus framework the U.S. Supreme Court approved in South Dakota v. Wayfair in 2018.
Separately, marketplace facilitators that enabled at least $250,000 in retail sales during the prior twelve-month period (measured October 1 through September 30) must register with DRS and collect Connecticut sales tax on all taxable transactions shipped to Connecticut addresses.16Connecticut Department of Revenue Services. OCG-8 – Regarding Marketplace Facilitators The facilitator is treated as the retailer on each sale, so third-party sellers on the platform don’t collect Connecticut tax separately on those transactions. If you sell through Amazon, Etsy, or a similar registered platform, the platform handles your Connecticut collection obligations for sales made through its marketplace. Direct sales through your own website are still your responsibility if you meet the state’s nexus thresholds.
Buying an Existing Business
If you purchase an existing Connecticut business, you can inherit the seller’s unpaid sales tax. Connecticut’s successor liability rule requires the buyer to withhold enough of the purchase price to cover any outstanding sales and use tax, and hold those funds until the seller produces either a DRS receipt showing the tax is paid or a certificate stating nothing is owed.17Connecticut State Department of Revenue Services. IP 2002(16) – Successor Liability for Sales and Use Tax, Admissions and Dues Tax A buyer who skips the step becomes personally liable for the unpaid amount, up to the full purchase price. No side agreement between buyer and seller changes this. Requesting a tax clearance letter from DRS before closing is the practical safeguard.