State Taxes at a Glance – Connecticut
| Type of Tax | 2023 |
|---|
| Individual Rates | 3.00% to 6.99% |
| Corporate / Business Tax Rates | 7.75% |
| Gross Receipts Tax | None |
| Property Taxes | 1.76% as a percentage of primary home |
| Sales Tax | 6.35% (average) |
| Estate or Inheritance Tax | Yes |
State Income Taxes in Connecticut
The state of Connecticut has an individual income tax. Like most states with income tax, it is calculated on a marginal scale whose range is from 3.00% to 6.99% for 2022.
Connecticut is one of two states that have a “tax benefit recapture” where the top tax rate (6.99%) is applied to all income if your income exceeds the top tax bracket of $500,000 (the other state is New York.)
State Business Taxes in Connecticut
The state of Connecticut has a flat Corporate Tax rate of 7.5%. Additionally, the Connecticut charges a 10% excise tax on a business’ tax liability (amount owed) if it has gross receipts of over $100 million. This excise tax is set to expire at the end of 2022, but don’t be surprised if the state extends it.
State Business Taxes Deduction – don’t pay twice!
Don’t pay your corporate / LLC businesses taxes twice! In order to avoid the $10,000 SALT cap established by the Tax Cuts and Jobs Act, the State of Connecticut gives you a tax credit on your personal tax return based on 87.5% of your Corporate / LLC business taxes.
On Part 3 of your Connecticut K-1 (CT K-1), there will be a box labeled Member’s Connecticut PT Tax Credit. Make sure your CPA applies the credit on your CT-1040 under Pass-through entity tax credit (Schedule CT-PE, Line 1).
Capital stock taxes in Connecticut
Connecticut is one of a few states that has a Capital Stock Tax. The tax rate is .11% up to a maximum payment of $1,000,000. Connecticut differs from other states in that taxpayers pay the greater of corporate income tax or capital stock tax liability. The Connecticut Capital Stock Tax is supposed to be phased out by the end of 2023.
Sales and Property Taxes in Connecticut
Sales Taxes in Connecticut – Connecticut doesn’t have a local tax rate. The state rate is 6.35% (This is considered average for the country, only because there are no local sales tax rates in Connecticut).
Property Taxes in Connecticut – the average property tax rate for residential property in the state of Connecticut is 1.76%, making it a less preferable place to own property.
Estate Taxes in Connecticut
Connecticut is one of the few states that have an Estate Tax. Like the IRS, there is an exemption amount of $10 million. The estate tax rate is 12%.
Connecticut Business Entities – LLCs
Connecticut is one of the cheapest states in the country to set up your LLC. Here are some important facts:
- Connecticut’s annual LLC fee at only $80.
- When you register with the state, you pay a one-time fee of $120
- Secretary of State of Connecticut website – click here
Connecticut DMV Registration Fees
It typically costs $125 to $132 to register your automobile in the state of Connecticut. You may not deduct your DMV fees directly, since the fees are not based on the value of your automobile. However, your local city or county does assess personal property tax on your automobile which is deductible.
Connecticut Domicile
Connecticut’s presumption is that it’s your permanent place of abode (domicile) if you’ve lived there for over 183 days during the taxable year.
State Tax on Social Security Benefits
Connecticut is one of the few states that partially taxes Social Security Benefits. There’s are exemptions based on income. If you make less than the amounts below, you do not have to pay tax on your social security income in Connecticut.
| Filing type | Exemption |
|---|
| Single | Less than $75,000 |
| Married filing jointly | Less than $100,000 |
Payroll Taxes in Connecticut
Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:
- Wage Base – Connecticut has a wage base of $15,000
- UI Rates – range from 1.90% to 6.80%
- Schedules – Connecticut has only one schedule regarding UI rates