Connecticut Sales and Use Tax: Rates, Exemptions, and Filing

The Connecticut sales and use tax is a 6.35% charge on most retail purchases, with higher rates on luxury goods, short-term car rentals, and lodging, and a matching use tax that buyers owe directly when an out-of-state seller doesn’t collect Connecticut tax at checkout. Both taxes are administered by the Department of Revenue Services (DRS). Retailers collect sales tax at the register; use tax lands on the buyer, which is why online orders from smaller out-of-state vendors are the most common place it comes up.

Tax Rates by Category

The base rate of 6.35% covers most tangible goods and taxable services.¹ Several categories carry different rates, and the differences are large enough to catch buyers and sellers off guard.

Luxury goods are taxed at 7.75%. That covers motor vehicles priced above $50,000, jewelry over $5,000, and clothing, footwear, handbags, or watches over $1,000. The higher rate applies to the entire price, not just the amount above the threshold, so a $51,000 car is taxed at 7.75% on the full $51,000.¹
Short-term rentals of passenger vehicles for 30 consecutive days or fewer are taxed at 9.35%, which supports the state’s Special Transportation Fund.²
Hotel and lodging stays of up to 30 days carry a 15% rate. Bed and breakfasts are taxed at 11%.¹
Vessels, vessel motors, boat trailers, and dyed diesel fuel sold at marine fuel docks are taxed at 2.99%.¹
Computer and data processing services, including custom programming, systems integration, and access to online professional or academic research databases, are taxed at 1%.¹
Active-duty service members stationed in Connecticut who are residents of another state pay 4.5% on motor vehicle purchases.¹

Prewritten software sold electronically follows the 6.35% rate for consumer purchases, but a business buying prewritten software for its own use still qualifies for the 1% rate. To claim it, the business must supply its name, address, and a statement that the software is for business use; for enterprise contracts, the purchase agreement itself is generally sufficient.³

What’s Exempt

Groceries intended for home consumption are exempt, including meat, dairy, produce, bread, and eggs. Prepared meals sold by restaurants, cafeterias, and food trucks stay taxable, and the statute defines “meal” broadly enough to include a deli sandwich wrapped to go.⁴

Prescription medications, syringes, and needles prescribed by a provider are exempt.⁴ Over-the-counter supplements, tonics, and dietary pills sold without a prescription do not qualify. The rule DRS applies: if a prescription is required under federal or state law, the item is exempt.

Newspapers, subscription magazines, and college textbooks are exempt in physical or digital form. Sales to the federal government and qualifying nonprofits are also exempt when the buyer furnishes a valid exemption certificate at the time of purchase.

Clothing is not broadly exempt. Everyday clothing is taxable at 6.35%, and items over $1,000 jump to the 7.75% luxury rate on the entire price.¹ The legislature has occasionally authorized a temporary Sales Tax Free Week for clothing under $100, but it isn’t permanent and depends on annual legislative action.

Use Tax on Out-of-State and Online Purchases

If you buy something for personal use and the seller doesn’t charge Connecticut sales tax, you owe use tax at the same rate that would have applied to a Connecticut sale. Large marketplaces usually collect it automatically under the facilitator rules, but purchases from independent websites and private sellers often slip through.

Report use tax on your Connecticut income tax return using Form CT-1040. If you aren’t required to file a state income tax return, use Form OP-186 instead, due by April 15. You can file one OP-186 for the year or submit several throughout the year. Businesses report use tax on their regular Form OS-114.

The penalty for individuals who skip use tax reporting is 10% of the tax owed, plus interest at 1% per month from the due date until payment.⁵

Who Must Register as a Seller

Any business with a sufficient connection to Connecticut must obtain a Sales and Use Tax Permit before making its first taxable sale. Physical nexus exists when a company has an office, warehouse, employees, or sales representatives in the state. Economic nexus applies to remote sellers who exceed $100,000 in gross receipts and 200 separate transactions during the twelve-month period ending September 30.⁶ Both taxable and exempt sales count toward those thresholds; sales for resale do not.

The permit costs $100 and renews every two years. Operating without one is a criminal offense punishable by fines of up to $500 or up to three months of imprisonment per violation.⁷

Selling Through Amazon, Etsy, or eBay

Under Conn. Gen. Stat. § 12-408e, a marketplace facilitator that processed at least $250,000 in retail sales during the prior twelve-month period must register with DRS, collect sales tax on every taxable sale it facilitates, and remit the tax as if it were the retailer. The platform carries the audit risk. If DRS finds it undercollected, the facilitator owes the deficiency, not the individual seller, unless the seller supplied incorrect information about the product or its taxability.⁸

Sellers who hold their own Connecticut permit can avoid double-collecting by keeping either a contract in which the facilitator explicitly agrees to handle sales tax, or a certificate of collection confirming the facilitator is registered and will collect on the seller’s behalf. When those conditions are met, the seller excludes those platform sales from its own return.⁸

Filing Form OS-114

Every registered business must file Form OS-114 even for periods with no sales. DRS assigns a filing frequency of monthly, quarterly, or annual based on expected volume. Returns are due on or before the last day of the month following the end of the filing period; if that date falls on a weekend or legal holiday, the deadline shifts to the next business day.⁹

The return begins with total gross receipts from all sales, including nontaxable ones, then subtracts deductions for exempt sales, resale transactions, and other nontaxable items. Labor charges need to be separated from parts or materials, since the tax treatment can differ by type of work.

All returns are filed through the myconneCT portal, which replaced the older Taxpayer Service Center; old TSC logins do not carry over.¹⁰ If you file electronically, you must pay electronically, typically by ACH debit from a linked account. Payments can be scheduled in advance of the due date.

Penalties and Interest

A business that misses its filing deadline owes a penalty of 15% of the tax due or $50, whichever is greater, plus interest at 1% per month from the original due date.⁵ The 1% is calculated on any fraction of a month, so slipping one day into a new month adds another full percentage point. Individuals face the lower 10% rate with the same monthly interest. On a $2,000 business liability paid six months late, that’s $300 in penalty plus $120 in interest on top of the tax.

Records and Exemption Certificates

When a customer claims a sale is exempt or for resale, the seller must collect and keep the documentation. For resale, the buyer must provide a properly completed Connecticut Sales and Use Tax Resale Certificate at the time of sale. Without it, the full amount is presumed taxable, and DRS will hold the seller responsible for the uncollected tax on audit.¹¹

Exempt organizations buying meals or lodging present specific DRS certificates at the point of sale, and the seller retains them rather than sending them to DRS.¹² Businesses must keep sales tax records for at least three years from the extended due date of the return, and the Commissioner can require longer retention in writing when specific records remain material to an ongoing matter.¹³

Appealing a DRS Assessment

If DRS audits your returns and issues an assessment you disagree with, you have 60 days from the first formal billing notice to request a hearing with the Appellate Division. The request must be in writing and include your registration number, the audit control number, the periods in question, and a detailed explanation of the adjustments you’re contesting.¹⁴

An Appellate Officer schedules a hearing, reviews new documentation, and issues a Final Determination Letter. Interest continues to accrue during the appeal. You can limit that exposure by making a deposit in the nature of a cash bond while the appeal is pending.¹⁴

If the Appellate Division’s decision doesn’t resolve the dispute, you have one month from the date of the Final Determination Letter to file an appeal in Connecticut Superior Court.¹⁴ That’s a short window, so calendar it the day the letter arrives.

Buying an Existing Business

Anyone purchasing a Connecticut business should understand successor liability before closing. The buyer of a business is personally liable for the seller’s unpaid sales and use tax debts, up to the full purchase price, unless the buyer obtains a tax clearance certificate from DRS first.¹⁵

DRS recommends requesting the clearance certificate at least 90 days before the expected closing date. The request must be sent by registered or certified mail and include both parties’ tax registration numbers, a signed letter of intent, a copy of the purchase agreement, the purchase price, and the expected closing date. Hand-delivered, emailed, and faxed requests are not accepted.¹⁵

Once DRS has all required information, it has 60 days to either issue the clearance certificate or send an escrow letter detailing the seller’s outstanding liability. If DRS fails to respond within that window, the buyer is released from successor liability entirely. A buyer who closes without the certificate can end up paying the seller’s back taxes on top of the purchase price, with no recourse.¹⁵

1
Justia. Connecticut Code 12-408 – The Sales Tax
2
Connecticut Open Data. Connecticut Sales and Use Tax at 9.35%
3
Connecticut Department of Revenue Services. SN 2019(8) Sales and Use Taxes on Digital Goods and Canned or Prewritten Software
4
Justia. Connecticut Code 12-412 – Exemptions
5
Justia. Connecticut Code 12-419 – Interest and Penalties
6
Justia. Connecticut Code 12-407 – Definitions
7
Justia. Connecticut Code 12-409 – Permits
8
Connecticut General Assembly. Chapter 219 – Sales and Use Taxes
9
Connecticut Department of Revenue Services. Instructions for Form OS-114 Sales and Use Tax Return
10
Connecticut Department of Revenue Services. myconneCT
11
Connecticut Department of Revenue Services. IP 2009(15), Notice to Retailers on Sales and Use Tax Resale Certificates
12
Connecticut Department of Revenue Services. Managing Exempt Status
13
Connecticut eRegulations. Sec. 12-2-12. Recordkeeping and Record Retention
14
Connecticut Department of Revenue Services. PS 92(4.2), Your Rights as a Connecticut Taxpayer
15
Connecticut Department of Revenue Services. IP 2002(16), Successor Liability for Sales and Use Tax, Admissions and Dues Tax