Connecticut taxes only the services its legislature has specifically written into the sales tax statute, Connecticut General Statutes § 12-407, at the standard 6.35% rate. Everything else is outside the tax by default. So the question of what services are taxable in Connecticut comes down to a single list: if a service appears on it, you charge or pay sales tax; if it doesn’t, you don’t. That approach is the opposite of states that tax services broadly and then exempt specific ones, and it means the statutory list itself is the reference that matters.
A few rates sit alongside the 6.35% default. Businesses buying cloud-based software (SaaS) pay a reduced 1%, while individual consumers pay the full 6.35% on the same product. Restaurant meals carry an extra 1% surcharge, for an effective 7.35%. Dry cleaning establishments owe an additional 1% surcharge on gross receipts from dry cleaning work, on top of the sales tax the customer pays. And if you buy a taxable service from an out-of-state provider that doesn’t collect Connecticut tax, you owe the equivalent use tax yourself at the same rate.
Services That Are Taxable
Work on Commercial or Income-Producing Real Property
Services performed on “industrial, commercial or income-producing real property” are taxable. That covers plumbing, electrical, painting, carpentry, property management, and similar work done on offices, retail stores, warehouses, factories, and rental properties.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407 The property type is what controls, not the trade. The same plumber doing the same repair owes tax on a four-unit rental building and no tax on a homeowner’s single-family house. More on that line below.
Repair and Maintenance of Tangible Personal Property
Repair and maintenance of physical goods, including electronics, appliances, vehicles, and equipment, is taxable. State regulations define “repair” as mending or restoring something that is broken, damaged, or malfunctioning. Installing brand-new parts or accessories that don’t replace an existing component falls outside that definition. Both labor and parts are taxed, and the invoice has to separate the two charges. Service call fees, minimum charges, hourly or flat rates, mileage, and pickup or delivery charges all count as taxable charges for the repair.2Connecticut eRegulations. Regulations of Connecticut State Agencies – Sec. 12-407(2)(i)(DD)-1
Computer and Data Processing Services, Including SaaS
This is one of the broadest categories on the list. It covers programming, writing code, modifying existing programs, feasibility studies, and installing or implementing software systems, including work tied to custom software development or licensing.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407 Cloud-based software sits here too. Businesses pay 1% on SaaS; individual consumers pay 6.35%. If a provider bundles taxable SaaS with nontaxable professional services on one invoice without separating the charges, the whole bundle can end up taxed. The Department of Revenue Services addressed these distinctions in Special Notice 2019(8).
Business Consulting, Management, and Public Relations
Business analysis, management consulting, and public relations services are taxable. Two carve-outs: environmental consulting is excluded, and training services provided by accredited institutions of higher education are excluded.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407 The nature of the service controls, not the credentials of who delivers it. A management consultant’s fee is taxed; a lawyer’s fee for legal advice isn’t, because legal services aren’t enumerated.
Personnel and Staffing Services
Employment agencies and personnel-services agencies collect 6.35% on the full fee billed to the client, whether the placement is temporary administrative work or specialized technical labor.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407
Security, Investigation, and Protection
Private investigation, protection, patrol, watchman, and armored car services are taxable. Two narrow exclusions apply: services provided by off-duty police officers and off-duty firefighters, and coin and currency services provided between financial services companies.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407
Credit Reporting and Debt Collection
Credit reporting and debt collection services are taxable. Any fee a collection agency charges to recover debts carries the 6.35%.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407
Pet Grooming, Boarding, and Training
Pet grooming, pet boarding, and pet obedience training are taxable, with one exception: grooming or boarding provided as an integral part of professional veterinary services is excluded.3Connecticut State Department of Revenue Services. Services Subject to Sales and Use Taxes A vet boarding your dog after surgery doesn’t collect the tax. A standalone kennel does.
Dry Cleaning and Laundry
Dry cleaning and laundry services are taxed at 6.35%, and dry cleaning establishments also owe a 1% surcharge on gross receipts from dry cleaning work. Independent drop stores that take in garments for cleaning done elsewhere must register as retailers and collect sales tax on their receipts.4Connecticut State Department of Revenue Services. Dry Cleaning Establishments Tax Information
Other Enumerated Services
- Photographic studio services, including portrait sessions and commercial photography.
- Painting and lettering services, such as signage and vehicle lettering.
- Telephone answering services for businesses.
- Stenographic services, including transcription and court reporting.
- Motor vehicle storage, including storage of motor homes, campers, and camp trailers.3Connecticut State Department of Revenue Services. Services Subject to Sales and Use Taxes
- Piped-in music provided to business or professional establishments.
- Flight instruction and chartering by certificated air carriers.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407
Services That Are Not Taxed
Because the statute reaches only the services on its list, a long roster of common services sits entirely outside the sales tax. These aren’t “exemptions” in the technical sense; they simply were never enumerated.
Legal services, accounting, auditing, tax preparation, architectural services, and engineering are not on the list and are not taxable. Healthcare services from physicians, dentists, hospitals, and other licensed practitioners are not taxable, and veterinary services themselves are not taxable. Educational services, including tuition at accredited schools and universities, are not taxable. Environmental consulting is specifically carved out of the otherwise-taxable consulting category.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407
Nonprofit organizations that hold a valid exemption certificate from the DRS may be able to buy without paying tax on mission-related purchases, but the certificate has to actually be in hand. Nonprofit status by itself doesn’t make purchases tax-free.
The Residential vs. Commercial Property Line
The single rule that trips up the most people: owner-occupied residential property with three or fewer dwelling units is explicitly excluded from the real property services tax.1Justia Law. Connecticut Code Title 12 – Taxation, Chapter 219, Section 12-407 Hire a plumber for your own home, no tax. Hire the same plumber for a four-unit building you own as a rental, 6.35% tax. Nonprofit housing organizations operating low- and moderate-income housing facilities also fall outside this category, even though those properties generate income. Contractors working across both residential and commercial jobs need to document the property type for each one.
If You Have to Collect It
Anyone selling a taxable service in Connecticut must get a Sales and Use Tax Permit from the DRS before making any sales, regardless of how much tax is expected.5Connecticut State Department of Revenue Services. Registering Your Business with DRS Returns are filed on Form OS-114, electronically, and are due by the last day of the month after the filing period ends. You file even in periods with no sales.6Connecticut State Department of Revenue Services. Sales and Use Tax Returns Keep invoices, receipts, exemption certificates, and the working papers behind your returns; inadequate records can itself be treated as evidence of negligence.7Connecticut eRegulations. Section 12-2-12 – Recordkeeping and Record Retention
One point worth taking seriously if you collect tax: the money isn’t yours. Under Connecticut General Statutes § 12-414a, the DRS can assess a “responsible person penalty” against any individual with the duty and authority to collect, account for, or pay over the tax, including corporate officers, directors, shareholders, LLC members, limited partners, and employees with control over funds. The penalty equals the full unremitted tax plus interest and penalties, and the state can pursue personal assets without waiting for the business to close.8Connecticut Department of Revenue Services. Can I Be Held Personally Liable For Payment of Business-Related Taxes? Misreading the taxable-service list on the front end can turn into personal exposure on the back end.