Individual Income Tax Forms
Corporate Income Tax Forms
Sales Tax Forms
Property Tax Forms
Connecticut, like most states, has felt the burden of recent economic hardships, and this has caused a fierce battle over whether the state's current policies of taxation will have to be amended to allow increases in taxes and even new taxes. At the heart of this debate is Connecticut's complicated economic history, which has been fraught with disputes between different income classes.
Connecticut's image has always been one based on wild variations between great affluence and relative poverty, without much of a middle class in between. Decades ago, Connecticut had very low sales taxes and no tax on earned income, which allowed for many people who worked in New York City (and Boston) to commute to work from their home in Connecticut.
To make up for this budget shortfall, stocks, bank accounts, dividends, and other accounts would be taxed exorbitantly, between 11 and 13% of their yearly interest income. Since this discouraged financial investment in Connecticut, the burden was taken up by property taxes, which meant that only the truly affluent could afford to own property and states, which cause devaluation of lower income properties that became unsellable.
After this was revised in 1991 to allow for lower income rates of dividends and bonds, Connecticut has become a major location for financial institutions, especially hedge fund groups, many of whom have relocated to Connecticut. As a result, Connecticut has more millionaires than any state save California, and the largest amount of over million dollar properties. Simultaneously, there is still a lower and middle income class who presently share much of the burden of the state's revenue, especially through flat sales taxes.
Recent legislation proposed in Connecticut has sought to amend the sales tax to 7% or higher and also provide for higher taxation of higher income individuals and corporations to account for budget shortfalls in the local economy. This has naturally led to a culture clash with many of the state's higher income professionals and corporations, who dislike the idea of being, taxed more.
At present, the two sides are in something of standoff, one that will likely only be resolved the closer Connecticut's economy comes to a crisis. While the decision is still uncertain, what is certain is that it is a decision that will likely determine the income and economic balance in Connecticut for years to come.
Connecticut's income taxation for individual taxpayers is determined through a very complicated set of tables where an income amount must be determined within a category of within fifty dollars. For instance, someone who makes $20,075 in year will fall on the table between $20,050 and $20,100, which will tell them that they owe $138 if there are a single filed, $0 if they are a couple filing jointly, $170 if married filing jointly, and $8 if filing as the head of a household.
Those with an income under $12,050 are not required to pay income taxes, while single or married couples filing jointly are not required to pay if they make under $13,050. The table tops out at $102,000, and above that level of income generally requires calculation of taxes using a specific rate, which can generally lie between 4.5 to 5%, and is determined by Connecticut's Department of Revenue Services.
Connecticut also taxes wages made by residents who work outside of the state, save in situations where the income tax is higher in that state than in Connecticut (which mean that many people who work in New York or Massachusetts but live in Connecticut are exempt from having their wages taxed).
Connecticut's taxes on dividends from bonds, trusts, savings, and so forth used to astronomically high, the highest in the nation, but legislation passed in 1991 deflated this amount to around 3 to 5% statewide, depending on municipality.
Corporate Income Taxes:
Every business in Connecticut is required to pay a flat Business Entity Tax of $250 for each year of existence. Connecticut otherwise has a flat corporate income tax of 7.5%, which is slightly higher than the average, but the state remains very corporation friendly due to numerous incentives it gives to corporations based on start-up costs and job creation. Its revised taxes on income from dividends and bonds have made it a popular location for many financial companies, especially in the Greenwich area, which has become the hedge fund capital of the country.
Property taxes in Connecticut are determined on a municipal basis, meaning each city and town collects their own property taxes. The regulation of property tax collection statewide is under the auspices of the Office of Policy and Management instead of the Department of Revenue Services, which oversees all other tax services.
All real and personal property in Connecticut in subject to property taxes, usually at 70% of its assessed value, though that can become higher based on the city or town's taxation policy. Most towns and municipalities determine their property taxes by determining the mill rate (where a mill equals 0.1% per dollar spent) based on the town's budget needs for a year.
Connecticut's property taxes can be fairly erratic from municipality to municipality because Connecticut's economic climate and property values can vary considerably. Connecticut has more homes value over a million dollars than any state in the country save California, yet the median home value is fairly low, only around $200,000. This means that certain areas may charge a higher mill rate than others based on the value of homes in that district.
Sales tax in Connecticut is a flat 6% across the entire state, with no adjustments allowed on the municipal or country level. The sales tax is also very limited in scope, as all non-prepared foods are untaxed, as are prescription and nonprescription drugs.
Magazines and newspapers are also untaxed, as are student textbook purchases, and most articles of clothing prices under $50. The state also implements one week late each summer where sales tax is rescinded on many item and articles of clothing as an allowance for families with children who are attending school (thought the one week clemency is available to everyone).
Use tax in Connecticut is basically the same, although shipping delivery charges on items that are subject to taxation in the state are themselves subject to taxation.
Connecticut's income tax returns are called the CT 1040, and it takes on many different forms based on residency, length, and payment schedules.