Sales tax is a tax that is applied to the purchase price of taxable goods and services sold to consumers. It is collected by the retailer from the customer at the time of sale and then remitted to state and local tax authorities.
In Connecticut, sales tax consists of a 6.35% statewide tax along with additional local sales taxes in some municipalities. The total Connecticut sales tax rate can be as high as 7.35% in areas with the maximum local tax. Understanding the proper calculation, collection, exemptions and administration of Connecticut sales tax is crucial for businesses making retail sales in the state. It also helps consumers know what purchases they may qualify to buy tax-free.
Connecticut Sales Tax Calculator
The baseline statewide sales tax rate in Connecticut is 6.35%. This 6.35% rate applies to the total price of all retail goods sold and taxable services rendered. On top of the 6.35% state tax, some cities and towns in Connecticut have additional local sales tax rates ranging from 0.5% up to 1%. When the state and local rates are combined, the highest total sales tax rate across Connecticut is 7.35%.
To accurately calculate how much sales tax is due on a transaction in Connecticut, use our Connecticut Sales Tax Calculator. Just select county and input purchase price of any item, and calculate the sales tax due.
Connecticut Sales Tax Calculator
Connecticut Sales Tax Calculator
It is essential that sellers determine the correct tax rate that applies based on whether the sale occurs in a jurisdiction with just the standard state tax or an additional local tax as well. The Connecticut Department of Revenue Services provides tools to lookup the exact tax rate by address.
CT sales tax on food
Connecticut imposes full sales tax on most food sold for immediate consumption. This includes restaurant meals, takeout food, concession stand items, and prepared deli foods. However, grocery food items meant for home consumption are exempt. This means ingredients like meat, produce, bread, cereal, milk, etc. are not taxed. But once food is prepared, the 6.35% tax applies. Overall, ready-to-eat foods are taxable, while most unprepared grocery foods are not.
What goods are subject to tax in CT?
Connecticut broadly taxes retail sales of tangible personal property. This covers goods like clothing, furniture, electronics, jewelry, toys, books, gasoline, cigarettes, and more. Several exceptions exist, such as groceries, prescription medicine, and machinery/tools for business use. Some services are also taxable, such as hotel stays, parking, laundry, and manufacturing services. In general, retail sales of physical products meant for consumer use are subject to CT’s 6.35% statewide sales tax.
CT sales tax on cars
Vehicle purchases in Connecticut are subject to the 6.35% sales tax plus a 7.75% luxury tax on vehicles costing over $50,000. This luxury tax was passed in 2021. So while the baseline sales tax is 6.35% for cars, those costing over $50,000 get hit with the additional 7.75% luxury tax. Connecticut also collects property tax on vehicles annually based on town mill rates. Out-of-state car purchases may get a credit for taxes paid.
Exemptions from Sales Tax in Connecticut
While Connecticut sales tax applies broadly to many transactions, there are some exemptions provided under state law. Major categories of exemptions include:
- Food and groceries – Most food and food ingredients meant for home consumption are exempt from sales tax in Connecticut. However, prepared meals sold by restaurants are still subject to the tax.
- Clothing and footwear – For clothing and shoes priced under $100 per item, there is a sales tax exemption. However, clothing over $100 per item is still taxable.
- Prescription medications – Prescriptions, over-the-counter medications, diabetic supplies, and other medical products sold with a prescription are exempt from sales tax.
- Nonprofits – Qualified nonprofit organizations can apply to receive exempt status for sales tax on eligible purchases. There is an application process to receive this exemption.
- Manufacturing materials – Materials, tools, machinery, and fuel predominantly used in manufacturing processes qualify for a sales tax exemption.
- Motor vehicle trade-ins – When trading in an old car that is applied to the purchase price of a new vehicle, only the difference is taxable.
- Medical devices – Prescribed medical equipment and devices such as wheelchairs, beds, monitors and oxygen systems can be purchased exempt from sales tax with a prescription.
- Haircuts – Haircuts performed at licensed barber shops or beauty salons are exempt from sales tax. Other personal services like massages remain taxable, however.
- Einvelope manufacturing equipment – Machinery used predominantly in envelope manufacturing is exempt by law.
Administration and Compliance of Connecticut Sales Tax
The Connecticut Department of Revenue Services (DRS) oversees the administration of state and local sales tax policies, collections and enforcement. Some key aspects of administration include:
- Registration – Retailers selling taxable tangible goods or services in Connecticut must register with the DRS for a Sales Tax Permit. Registration enables the state to monitor tax filings and payments.
- Filing and payments – Sales tax returns are filed and paid monthly, quarterly or annually based on the volume of a business’s taxable sales. Returns and payments are due by the last day of the month following the tax period end.
- Penalties and interest – Late payment of taxes owed or failure to file returns can face substantial penalties of 10% to 50% plus 1% per month interest on amounts due. Significant penalties can apply for tax evasion.
- Tax jurisdiction databases – The DRS provides the CT Tax Area Lookup tool for precisely identifying the correct state and local tax rates based on geographical jurisdiction.
- Audits – Regular sales and use tax audits are conducted by the DRS to verify companies are properly charging, collecting, filing and remitting sales tax as required.
- Appeals – Taxpayers can utilize the DRS appeals process to contest audit findings, penalties or other sales tax compliance actions.
- Taxpayer rights – A published statement provides taxpayers with rights during disputes, including representation, conferences, payment plans and more.
Conclusion
Connecticut has a statewide sales tax rate of 6.35% along with additional local taxes between 0.5% and 1% in some jurisdictions. Proper calculations using the correct state and local rates, applying eligible exemptions, registering for a permit, and regularly filing and remitting taxes are crucial for business compliance. Consumers may also avoid select taxes by understanding qualifying exemptions. Accounting professionals can help optimize sales tax processes and reporting for retailers operating in Connecticut.
FAQs
What is CT sales tax on clothing?
Clothing and footwear under $100 are exempt from Connecticut’s 6.35% sales tax. Anything over $100 is taxable.
What is CT luxury tax?
Connecticut imposes a 7.75% luxury tax on vehicles costing over $50,000, boats over $100,000, and real property services over $500.
What is CT highest tax rate?
The highest income tax rate in Connecticut is 6.99% on taxable income over $500,000 for single filers and over $1 million for joint filers.
When did CT sales tax start?
Connecticut first enacted a sales and use tax in 1947 at a rate of 3%. The rate has gradually increased over time to the current statewide rate of 6.35%.
Is coffee taxable in CT?
Yes, coffee is subject to Connecticut sales tax, whether it is prepared or packaged coffee. All food and drinks meant for consumption are taxable in CT, with the exception of grocery food items. So coffee sold at coffee shops or restaurants is taxed at 6.35%. Packaged coffee sold at grocery stores is also taxable.
