IP 2003(33) Personal Taxes Purpose: This Informational Publication is a general guide to Connecticut taxes for individuals. It includes information on the income and alternative minimum taxes, admissions and dues tax, and sales and use taxes, as well as succession, estate, gift, real estate conveyance, alcoholic beverages, cigarette, motor vehicle fuels, and property taxes. While it does not answer every question about Connecticut taxes, it provides answers to some of the most common inquiries. Income Tax The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents with income from Connecticut sources. (See the Connecticut income tax instruction booklets to determine your residency status.) The tax is computed on your Connecticut taxable income. To compute your Connecticut taxable income, subtract your Connecticut personal exemption from your Connecticut adjusted gross income. If your Connecticut adjusted gross income is less than or equal to the maximum exemption amount for your filing status, you do not owe any Connecticut income tax. Personal Exemptions: The maximum personal exemption levels for single filers is being increased annually until it reaches $15,000 in taxable year 2010. The following are the changes for the 2003 through 2007 taxable years: Taxable Year Maximum Personal Exemption $1,000 Reduction in Exemption for January 1, 2003 $12,500 $25,000 January 1, 2004 $12,625 $25,250 January 1, 2005 $12,750 $25,500 January 1, 2006 $13,000 $26,000 January 1, 2007 $13,500 $27,000 The maximum personal exemption levels for married filing separately filers, head of household filers, and married filing jointly filers remain unchanged. Filing Status Maximum Personal Exemption $1,000 Reduction in Exemption for Every $1,000 of CT AGI Over Married filing separately $12,000 $24,000
Purpose: This Informational Publication is a general guide to Connecticut taxes for individuals. It includes information on the income and alternative minimum taxes, admissions and dues tax, and sales and use taxes, as well as succession, estate, gift, real estate conveyance, alcoholic beverages, cigarette, motor vehicle fuels, and property taxes. While it does not answer every question about Connecticut taxes, it provides answers to some of the most common inquiries.
The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents with income from Connecticut sources. (See the Connecticut income tax instruction booklets to determine your residency status.) The tax is computed on your Connecticut taxable income.
To compute your Connecticut taxable income, subtract your Connecticut personal exemption from your Connecticut adjusted gross income. If your Connecticut adjusted gross income is less than or equal to the maximum exemption amount for your filing status, you do not owe any Connecticut income tax.
Personal Exemptions: The maximum personal exemption levels for single filers is being increased annually until it reaches $15,000 in taxable year 2010. The following are the changes for the 2003 through 2007 taxable years:
Maximum Personal Exemption
$1,000 Reduction in Exemption for
January 1, 2003
January 1, 2004
January 1, 2005
January 1, 2006
January 1, 2007
The maximum personal exemption levels for married filing separately filers, head of household filers, and married filing jointly filers remain unchanged.
Maximum Personal Exemption
$1,000 Reduction in Exemption for Every $1,000 of CT AGI Over
Married filing separately
Tax rate: The tax rate is 3% on the first:
The remaining income is taxed at 5%.
Credits: You may be eligible for a personal tax credit between 1% and 75%, depending on your income level.
A property tax credit is also available to resident individuals for property taxes paid to a Connecticut political subdivision on a primary residence or a motor vehicle, or both. Generally, this credit is allowed for property tax bills first becoming due during a taxable year and paid during the taxable year.
This credit is also allowed for second or later installments of property tax paid during a taxable year, where the first installment became due during the taxable year. Supplemental property tax bills first becoming due during a taxable year and paid during the taxable year also qualify for this credit. The payment of any delinquent property tax bills or the payment of interest, fees or charges related to the property tax bill does not qualify for this credit.
The maximum property tax credit is $350 per return for the 2003 taxable year. Depending on the amount of property taxes you paid to a Connecticut municipality and your Connecticut adjusted gross income, the property tax credit may be reduced or you may not be eligible for a credit. Formerly, if you paid $100 or more in qualifying property taxes, you were entitled to a property tax credit of at least $100, regardless of the amount of your Connecticut adjusted gross income. See Informational Publication 2003(24), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision, for more information.
Estimated Payments: Employers withhold Connecticut income tax from the wages of residents and nonresidents who work in Connecticut. You must make estimated Connecticut income tax payments if your Connecticut income tax (after tax credits) minus Connecticut income tax withheld is more than $500, and you expect your Connecticut income tax withheld to be less than your required annual payment. Estimated payments are generally made in four equal installments: April 15, June 15, September 15, and January 15. If your income varies throughout the year, however, you may be able to reduce or eliminate the amount of one or more estimated payments by using the annualized installment method. See Informational Publication 99(35), Estimated Connecticut Income Taxes, and Informational Publication 99(33), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheets CT-1040AES.
Your Connecticut income tax return is due on or before the fifteenth day of the fourth month following the end of your taxable year (April 15 if your taxable year is the calendar year).
Alternative Minimum Tax
The Connecticut alternative minimum tax is a tax imposed on certain individuals, estates, and trusts in addition to the regular Connecticut income tax. Taxpayers who are subject to and required to pay the federal alternative minimum tax are subject to the Connecticut alternative minimum tax.
The Connecticut alternative minimum tax is the lesser of:
The tax must be reported on Form CT-6251, Connecticut Alternative Minimum Tax Return — Individual. See Informational Publication 2001(9), Q & A: The Connecticut Alternative Minimum Tax.
The Connecticut succession tax is being phased out and is scheduled for total repeal in 2008. There is a total exemption from Connecticut succession tax if the entire estate passes to a surviving spouse. For estates of decedents dying on or after January 1, 2001, any part of the net taxable estate passing to Class A beneficiaries is no longer subject to the tax.
A succession tax return must be filed for all deceased residents of Connecticut and for all deceased nonresidents owning real or tangible personal property located in Connecticut, even if no tax is due. For a resident decedent's estate, the tax applies to all property, except for real property and tangible personal property located outside Connecticut. For a nonresident decedent's estate, the tax applies only to real property and tangible personal property located in Connecticut. The tax rate depends on the relationship of the beneficiary to the decedent and the size of the estate. For information and tax tables for estates of decedents dying after 1996, see Special Notice 2003(13), 2003 Legislative Changes Affecting the Succession Tax.
The estate tax applies only to estates required to file a federal Form 706, Federal Estate Tax Return. The tax applies to resident and nonresident estates.
If you made a gift, you may be required to file federal Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and Form CT-709, Connecticut Gift Tax Return.
Residents are taxed on all gifts of intangible property and on gifts of real property and tangible personal property located in Connecticut. Nonresident donors are taxed on gifts of real and tangible personal property located in Connecticut.
Gifts of a present interest to any particular donee during the calendar year are not subject to the Connecticut gift tax unless the value of all the gifts to the donee during the calendar year exceeds $11,000. Transfers of future interests are not covered by this annual exclusion.
The special valuation rules under I.R.C. §§2701 to 2704 (dealing with transfers to or for the benefit of family members) apply for Connecticut gift tax purposes. For example, if a donor delivers a deed transferring title to his home to his children but reserving a life use, the value of the gift equals the sum of the value of the life estate and the value of the remainder interest (that is, the full fair market value of the home). Because this is a transfer of a future interest, no annual exclusion is allowed.
Legislation enacted in 2003 delays the incremental reduction and ultimate repeal of the gift tax (other than for those donors whose amount of taxable gifts, for Connecticut gift tax purposes, exceed $1 million during a calendar year). See Special Notice 2003(12), 2003 Legislation Affecting the Gift Tax, and the instruction booklet for Form CT-709.
Local Real Estate and Personal Property Taxes
Real estate and personal property are subject to this tax, with some statutory exemptions. Communities levy property tax to fund local government. Neither the state nor its counties levy a property tax. For further information about local real estate and personal property taxes, contact the assessor in the city or town where the property is located, write to the Intergovernmental Policy Division, Office of Policy and Management, 450 Capitol Avenue, Mail Stop 54 FOR, Hartford CT 06106-1308, or visit the Office of Policy and Management Web site at www.opm.state.ct.us
October 1 is the assessment date for all municipalities. All owners of personal property, other than registered motor vehicles, must file a declaration with the assessor on or before November 1.
Homeowner/Renter Tax Credit: An annual property tax credit or rent rebate is available to residents, age 65 or older, or to a surviving spouse, age 50 or older, who meet certain residence and income requirements. Regardless of age, a totally and permanently disabled person is also eligible. Contact the assessor in your town or city for details and forms.
Veteran Exemption: A variable, annual tax exemption on the assessed value of an owner-occupied dwelling or on a motor vehicle is available to any qualified veteran or surviving spouse. Contact the assessor in your town or city for details and forms.
Real Estate Conveyance Tax
A state and municipal real estate conveyance tax is imposed on deeds conveying real estate where the consideration for the interest in property equals or exceeds $2,000. A deed for less than $2,000 in consideration is exempt from this tax, but may be subject to the gift tax. A deed of the principal residence of any person receiving property tax benefits for the elderly is exempt from the state tax but subject to the municipal tax. The state tax rate on the consideration received for the real estate is as follows:
Those conveying the property pay the state and municipal taxes. The grantor/seller must present a separate check to the Town Clerk, payable to the Commissioner of Revenue Services, in payment of the state tax when recording the deed.
Sales and Use Taxes
A 6% tax is imposed on the sale or rental of most goods and the sale of certain services. However, there are exemptions, including, for example, food; all purchases made with food stamps; utility charges for residential property; household fuel; prescription drugs; certain nonprescription drugs; clothing under $50; yarn; and materials for noncommercial sewing used to make clothing.
The following renovation services to residential property are no longer taxable: paving, painting, staining, wallpapering, roofing, siding, and exterior sheet metal. Computer and data processing services are taxable at 1%.
When the seller of goods or provider of taxable services does not collect sales tax, the buyer must pay use tax at the same rate as the sales tax. Typically, if you purchase goods from mail order or catalog companies or over the Internet and have the goods shipped to Connecticut or you purchase goods at out-of-state locations and bring those goods back into Connecticut, you must pay the Connecticut use tax. If all the items purchased and brought into Connecticut at one time total $25 or less, you do not have to pay Connecticut use tax. The $25 exemption does not apply to items shipped or mailed to you.
You pay the use tax for purchases you made during the prior calendar year on either your Connecticut income tax return or on Form OP-186, Connecticut Individual Use Tax Return, on or before April 15. See Informational Publication 2003(27), Q & A on the Connecticut Individual Use Tax.
Room Occupancy Tax
A room occupancy tax of 12% applies to the rental of rooms in a hotel or lodging house for 30 consecutive days or less. See Policy Statement 2003(1), Application of Sales and Use Taxes and the Room Occupancy Tax to the Hotel and Motel Industry.
Alcoholic Beverages Tax, Cigarette Taxes, and Tobacco Products Tax
Alcoholic beverages tax, cigarette taxes, and tobacco products tax are included in the retail price of the items. In addition, 6% sales and use taxes apply at the time of sale.
The tax for alcoholic beverages, which is imposed on licensed distributors, is:
Alcohol in excess of 100 proof is taxed at $4.50 per proof gallon. Most alcoholic cider is taxed at the beer rate. See Special Notice 97(6), 1997 Legislative Changes to the Alcoholic Beverages Tax Affecting Wines and Cider.
You may legally bring into Connecticut up to four gallons of alcoholic beverages you bought or were given outside Connecticut. Bringing alcoholic beverages into Connecticut means personally carrying them into Connecticut, or transporting them into Connecticut in a motor vehicle you are driving, or if you are returning by air, rail, bus, or water to Connecticut, placing them in your luggage being returned with you to Connecticut. Bringing alcoholic beverages into Connecticut does not include having alcoholic beverages shipped to you. You do not need a permit to bring up to four gallons of alcoholic beverages into Connecticut, but you will owe Connecticut use tax and the Connecticut alcoholic beverages tax on the alcoholic beverages being brought into the state. To report and pay Connecticut use tax and Connecticut alcoholic beverages tax, you must file Form S&BT, Payment of Taxes Due on Importation of Alcoholic Beverages with DRS.
In Connecticut, the tax on cigarettes is $1.51 per pack of 20 cigarettes, while the tax on most tobacco products (excluding cigarettes) is 20% of the wholesale sales price.
Admissions and Dues Tax
The dues tax is a 10% tax levied on dues and initiation fees of a social, athletic, or sporting club that is either owned or operated by its members. The club is exempt from the dues tax if the annual dues of every member and any initiation fee are each $100 or less. Lawn bowling clubs are exempt from dues tax. See Informational Publication 2003(11), Q & A: The Dues Tax.
A 10% admissions tax applies to admission charges to any place of amusement, entertainment, or recreation. Charges over $5.00 to motion picture shows are subject to 6% admissions tax.
Certain venues are specifically exempt from admissions tax. Productions featuring live entertainment by actors or musicians at non-profit theaters and playhouses exempt under I.R.C. §501 are exempt from the tax. Also exempt from the tax are admission charges of $5.00 or less to motion picture shows and admission charges to carnivals, amusement rides, and establishments whose admissions charges would have been subject to the cabaret tax.
Motor Vehicle Fuels Tax
A tax is imposed on motor vehicle fuels used to propel motor vehicles on public roads and highways. The rate on gasoline is 25˘ per gallon; the rate on gasohol is 24˘ per gallon; and the rate for diesel fuel is 26˘ per gallon.
Motor Vehicle Fees
Effective January 1, 2004, the two-year registration fee for passenger cars is $75. Upon renewal, there is an additional $10 Clean Air Act fee for all classes of motor vehicles. Operator licenses are issued every four years for $43. For more information, call the Department of Motor Vehicles (DMV) at 1-800-842-8222 (in-state) or 860-263-5700 (from anywhere), or visit the DMV web site at www.ct.gov/dmv
Boat Registration Fees
There is an annual registration fee for boats in lieu of a local property tax. For information, contact the DMV at 1-800-842-8222 (in-state) or 860-263-5700 (from anywhere).
Effect on Other Documents: Informational Publication 2003(33) modifies and supersedes Informational Publication 2001(12), Personal Taxes.
Effect of This Document: An Informational Publication addresses frequently asked questions about a current position, policy, or practice, usually in a less technical question and answer format.
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