Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Connecticut.
April 29, 2024
U.S. District Court Upholds IRS’ Limitation on Charitable Contribution SALT Workarounds
Authored by: Brandon Mejia and Courtney Easterday, MS
In response to the TCJA, several states proposed enacting charitable contribution funds where taxpayers could make a charitable contribution to the state and receive a tax credit in return. In response, the IRS released guidance stating that there is only a charitable contribution to the extent the contribution exceeded the credit received. New Jersey, New York, and Connecticut ultimately sued the IRS, arguing that the IRS’ ruling violated the Administrative Procedures Act. The U.S. District Court of the Southern District of New York determined the IRS’ limitations on charitable contribution workarounds for the SALT cap were reasonable. Furthermore, the Court held that the states did not have standing to sue as none of the litigants established charitable contribution workarounds, and therefore, none could show any injury.
February 12, 2024
Connecticut DRS Extends Filing and Payment Deadlines for Individual and Business Tax Returns
Authored by: Kiana McGowan, CPA, MBA and Jonathan Weinberg, JD, LLM, Principal
The Connecticut Department of Revenue Services is extending the filing and payment deadlines for certain individual and business tax returns to June 17, 2024. These extensions align with the IRS’ extended due dates for taxpayers affected by recent storms and flooding resulting in FEMA disaster designations in parts of the state. If a taxpayer was directly affected by the FEMA designation and is unable to file by the extended deadline, they may contact the DRS to seek relief from any penalties and interest.
Please see TSSB 2024-1 for a list of the impacted returns and payment deadlines.
If you have questions about state disaster relief provisions, please reach out to a member of the Withum SALT Team.
December 15, 2023
Connecticut Taxes Massachusetts Registered Cars
Authored by: Katie Nguyen, CPA and Kiana McGowan, CPA, MBA
On December 13, 2023, the Connecticut Supreme Court held that Somers, Connecticut, could levy a tangible property tax on cars owned by Alico LLC. These cars were registered in Massachusetts but kept in Connecticut. In ruling for Somers, J. Alexander ruled:
- To the extent Alico [LLC] pays multiple taxes on its vehicles, it is because of the combined effect of Connecticut’s and Massachusetts’ different and non-discriminatory tax schemes—one of which taxes vehicles on the basis of their physical location and the amount of time that they are in the state, and the other that taxes vehicles on the basis of their registration in the state.
The Connecticut Supreme Court also ruled that the Connecticut and Massachusetts taxes were different and thus did not create impermissible double taxation. Specifically, the Court held the Massachusetts tax was an excise tax for the privilege of registering a car with the Massachusetts Department of Motor Vehicles, while Connecticut authorizes localities to impose property taxes on cars physically located within their jurisdiction.
For additional details, please refer to Alico, LLC v. Town of Somers, Conn., No. SC20748, 12/13/23.
If you have questions about tangible personal property taxes, please reach out to a member of the Withum SALT Team.
July 24, 2023
Connecticut Makes Its PTET Elective
Authored by: Katie Szymanski, CPA and Brandon Vance, CPA
On June 12, 2023, Connecticut Governor Lamont signed HB 6941, which makes several changes to the State’s pass-through entity tax (PTET). Presently, pass-through entities are required to participate in the State’s PTET. Starting in 2024, PTET participation will be elective.
The bill encompasses additional modifications to the PTET, including a revised method for calculating the tax base, the elimination of the corporation tax credit for PTETs paid, and the removal of the option for pass-through entities to file a combined return with other commonly owned pass-through entities. Additionally, the bill reinstates a requirement for pass-through entities to file a nonresident composite income tax return and pay the tax on behalf of any nonresident noncorporate member.
Furthermore, the bill extends the 10% corporation business tax surcharge for the years 2023, 2024, and 2025. The bill also reduces the lower brackets of the State’s personal income tax, reducing them from 3% to 2% and 5% to 4.5%.
If you have questions about how Connecticut’s tax changes affect you or your business, please reach out to a member of the Withum SALT Team.
June 16, 2023
Connecticut Governor Passes Budget Bill
Authored by: Katie Szymanski, CPA, and Brandon Mejia
On June 6, 2023, Governor Ned Lamont signed the state budget bill for fiscal years 2024 and 2025. The budget bill includes updates to personal income taxation, as well as corporate and pass-through entity provisions which affects Connecticut taxpayers.
Most notably, the budget bill lowers the 5% personal income tax rate to 4.5% and the 3% rate to 2%. Benefits will be capped at $150,000 for single filers and $300,000 for joint filers, effective January 1, 2024. The budget bill also extends the 10% corporation business tax surcharge until tax year 2025.
For additional details, please refer to L. 2023 H6941.
If you have questions about how Connecticut’s legislative changes affect you or your business, please reach out to a member of the Withum SALT Team.
February 10, 2023
Connecticut Governor Proposes Personal Income Tax Rate Cuts
Authored by: Brandon Mejia and George Gonzales, MST
During the February 6, 2023 State of the State address, Connecticut Governor Ned Lamont announced a two-year budget plan that includes reducing personal income tax rates. If enacted, it would mark the first time the state has decreased its personal income tax rates since 1996 and would be the largest state tax rate cut since 1991. Under the proposed rate cut, single filers could save up to $350 and married filing joint filers could save up to $700. The following proposed tax rate reductions would become effective for tax year 2024:
| Single Filer’s Brackets | Married Filing Joint Brackets | Current Rate | Proposed Rate | Maximum Savings (Single) | Maximum Savings (MFJ) |
| $0 – $10,000 | $0 – $20,000 | 3.00% | 2.00% | $100 | $200 |
| $10,001 – $50,000 | $20,001 – $100,000 | 5.00% | 4.50% | $350 | $700 |
| $50,001 – $100,000 | $100,001 – $200,000 | 5.50% | No Change | N/A | N/A |
| $100,001 – $200,000 | $200,001 – $400,000 | 6.00% | No Change | N/A | N/A |
| $200,001 – $250,000 | $400,001 – $500,000 | 6.50% | No Change | N/A | N/A |
| $250,001 – $500,000 | $500,001 – $1,000,000 | 6.90% | No Change | N/A | N/A |
| >$500,001 | >$1,000,001 | 6.99% | No Change | N/A | N/A |
January 13, 2023
Connecticut Governor Announces Legal Adult-Use Cannabis Sales, Subject to Sales and Excise Tax
Authored by: Brandon Spinella
Connecticut Governor Ned Lamont declared the beginning of authorized retail sales of cannabis in CT to persons 21 and older by licensed retailers. Such sales may begin on January 10, 2023 and are subject to sales and use taxes and excise taxes. There will be three separate taxes on Connecticut cannabis sales, including:
- The state’s 6.35% sales and use tax;
- A local 3% sales tax; and,
- An excise tax predicated on tetrahydrocannabinol content, which will range from 10%-15% of the sale price.
May 13, 2022
Connecticut Governor Signs Budget With $600 Million in Tax Cuts
Governor Ned Lamont signed the fiscal year 2023 budget containing $600 million of tax cuts. The enacted law extends the gas tax holiday, the child tax credit, and increases the property tax credit. Governor Lamont described the bill as “significant tax relief” for Connecticut’s lower and middle-earning families and retirees. The law:
- Suspends the state’s excise tax on gasoline through Nov 30, 2022;
- Allows a $250 per-child tax credit for lower and middle-income families;
- Increases the state’s earned income tax credit to 41.5% of the federal credit; and
- Increases the property tax credit from $200 to $300.
April 1, 2022
Connecticut Pauses Gas Tax and Provides Sales Tax Holiday
On March 24, 2022, Connecticut Governor Lamont signed legislation to suspend the 25 cents per gallon tax on gasoline and gasohol purchases from April 1, 2022 through June 30, 2022. Connecticut has stated that any retailer that fails to reduce the per-gallon price of gasoline during the sales tax holiday will be considered engaging in unfair or deceptive trade practices.
Additionally the state announced a sales tax holiday for clothing and footwear intended to be worn on or about the human body costing less than $100 from from April 10, 2022 through April 16, 2022. The state further clarified that clothing or footwear does not include accessories such as jewelry, handbags, luggage, umbrellas, watches, and other similar items carried on or about the human body but not worn on the body.
November 10, 2021
Connecticut Announces Tax Amnesty Program
On October 28, 2021, the Connecticut Department of Revenue Services (“DRS”) announced a Tax Amnesty which will run from November 1, 2021 through January 31, 2022. Pursuant to the Amnesty Program, individuals and businesses can pay past due taxes. Amnesty participants will receive penalty abatement, partial interest abatement, and may avoid criminal prosecution. The Tax Amnesty applies to any tax (except motor carrier road tax) for any tax period ending on or before December 31, 2020, in which an individual or business either under-reported, has current liabilities, or has not filed required returns and paid the applicable tax. If eligible tax obligations are not resolved via an amnesty filing by January 31, 2022, the taxpayer will face full interest, penalties, and potential criminal prosecution. [See: https://portal.ct.gov/DRS/Press-Room/Press-Releases/2021/State-Launches-Amnesty-Program]
July 8, 2021
Connecticut Enacts State and Municipal Cannabis Taxes on Recreational Marijuana
The governor of Connecticut, Ned Lamont, has signed legislation legalizing the recreational use of marijuana effective July 1, 2021. The bill allows for three taxes on the retail sale of cannabis. State sales tax at the standard 6.35% state sales tax rate, 3% sales tax dedicated to city or town municipals, and an additional cannabis tax rate based on the THC content that will cost roughly between 10 to 15% of the sale price. State of Connecticut Governor News
March 23, 2021
Connecticut Update on Extension of Filing Deadline
The Connecticut Department of Revenue Services (DRS) is extending the filing and payment deadline for Connecticut individual income tax returns to Monday, May 17th, 2021 to align with the recently announced extension for federal returns. ( Connecticut filing, payment deadlines for individual income tax returns extended to May 17th, 2021, 03/19/2021.)
March 17, 2021
Connecticut Permits Certain Remote Employees Credit for Taxes Paid to Other States
For the 2020 tax year, Connecticut residents who paid income tax to any other state with a “convenience of the employer rule” will be permitted a credit against their Connecticut individual income tax for such taxes paid to those other states on their income earned while working remotely from Connecticut. The aforementioned credit is signed into law via H.B. 6516, which also permits a credit for the 2020 tax year for Connecticut residents who paid takes to another jurisdiction on income earned while working remotely from Connecticut.
March 3, 2021
Connecticut Aiming To Protect Telecommuters from Double-Taxation
A proposed senate bill would expand a credit that has mainly been used by Connecticut residents commuting into New York or Massachusetts for work. Under the proposal, any Connecticut resident who regularly worked out of state prior to March 11, 2020 would be eligible for the credit, which would only be available to telecommuters for the 2020 tax year.
March 21, 2020
CT Filing and Payment Deadline Extended
The Connecticut Department of Revenue Services (DRS) is extending the filing and payment deadline for Personal Income tax returns 90 days, to July 15, 2020. The extension also applies to Connecticut’s estimated income tax payments for the first and second quarters of 2020. Learn more here.
March 2020
DRS Uses Statutory Authority to Grant Extensions
The Connecticut Department of Revenue Services (“DRS”) is using its statutory authority to grant an automatic extension of Connecticut filing deadlines for certain annual tax returns to support businesses during the COVID-19 outbreak. Effectively immediately, business return deadlines are extended until June 15 and Individuals’ returns will follow the IRS relief provisions. Additionally, the filing deadlines for certain annual tax returns due on or after March 15, 2020, and before June 1, 2020, are extended by at least 30 days. Payments associated with these returns are extended to the corresponding due date in June.
The impacted returns and the associated filing dates and payment deadlines are below:
- 2019 Form CT-1065/CT-1120 SI Connecticut PassThough Entity Tax Return: Filing date extended to April 15, 2020; payment deadline extended to June 15, 2020.
- 2019 Form CT-990T Connecticut Unrelated Business Income Tax Return: Filing date extended to June 15, 2020; payment deadline extended to June 15, 2020.
- 2019 Form CT-1120 and CT-1120CU Connecticut Corporation Business Return: Filing date extended to June 15, 2020; payment deadline extended to June 15, 2020.
For those preparing the Connecticut income tax (Form CT-1040) returns due April 15, DRS will adjust due dates for filing and payment of state income taxes to align with any specific, actionable announcement from the Internal Revenue Service regarding due dates for the filing and payment of federal income taxes.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
July 2019
Corporate and Pass-Through Entities
Beginning January 1, 2020 the bi-annual business entity tax will be eliminated. The pass-through entity tax credit will be reduced to 87.5% from 93.01%. The filing fee for pass-through entities will go up to $80 from $20 beginning July 1, 2020.
Sales and Use Tax
The threshold for economic nexus has been reduced to $100,000 in gross receipts and 200 transactions, down from the $250,000 threshold. This will be in effect July 1, 2019.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
