Connecticut: New Budget Impacts Sales, Business Taxes
- Jun 8, 2015 | Gail Cole

Update, 7.6.2015: Gov. Malloy has signed the budget, enacting the changes listed below. Other changes include the following: Water company purchases are taxable as of 7.1.2015; Motor vehicle parking in certain seasonal parking lots and hospital garages are taxable as of 7.1.2015; Computer and data processing services in connection with the creation, development, hosting or maintenance of a website will be taxable effective 10.1.2015; And the sales tax return filing due date for taxable periods ending on or after December 31, 2015 will be the end of the month instead of the 20th of the month. Additional information.
Against considerable odds, Connecticut lawmakers have succeeded in passing a two-year budget that includes a $2.8 billion increase in transportation funding and numerous business tax increases.
Governor Dannel Malloy (D) is expected to sign the budget. However, he is currently working to address concerns raised by General Electric, Aetna and Travelers insurance company, which are all based in Connecticut and opposed to the tax increases. GE and Aetna have gone so far as to say they could relocate if the proposed increases become law (Wall Street Journal).
Below is a list of sales tax changes that will take effect if the governor approves the budget.
Luxury items
Currently in Connecticut, certain luxury items are taxed at a rate of 7%. Beginning July 1, 2015, that rate would jump to 7.75%. Such luxury items include motor vehicles with a sales price of more than $50,000, jewelry costing more than $5,000, and clothing with a sales price exceeding $1,000.
Sales tax holiday
Connecticut’s annual August sales tax holiday for clothing expires on June 30, 2015. The new budget would renew and amend it as follows:
“From the third Sunday in August until the Saturday next succeeding, inclusive, [sales and use tax] shall not apply to sales of any article of clothing or footwear intended to be worn on or about the human body, the cost of which article to the purchaser is less than one hundred dollars.”
Services
Car wash services, “excluding coin-operated car washes,” would be subject to state and local sales taxes effective July 1, 2015.
Sales of computer and data processing services are currently taxed at the rate of 1%. For the period October 1, 2015 through September 30, 2016, they would be taxed at the rate of 2%. Effective October 1, 2016, the tax rate would increase to 3%.
Cigarette tax
The cigarette tax is also slated for increases:
- October 1, 2015: the per pack rate would jump from $3.40 to $3.65.
- July 1, 2016: the per pack rate would jump to $3.90.
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photo credit: Connecticut State Capitol via photopin (license)

