DRS: IP 99(3), Personal Taxes

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been modified and superseded by IP 99(3.1)

IP 99(3)

Personal Taxes


PURPOSE:   This publication is intended as a general guide to Connecticut taxes for individuals. Information on the income and alternative minimum taxes, admissions,  dues and cabaret tax and sales tax, as well as succession, estate, gift, real estate conveyance, alcoholic beverage and cigarette, motor fuel and property taxes is included in this publication. While it does not answer every question about Connecticut taxes, it will provide answers to some of the most common inquiries. To order forms or publications or to get help, follow the instructions below.


INCOME TAX:  The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents who have income from Connecticut sources. (See the instructions in 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.

Maximum personal exemption levels are:

$12,000 - single filer or married filing separately

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $24,000, the exemption amount is reduced by $1,000.

$19,000 - head of household

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $38,000, the exemption amount is reduced by $1,000.

$24,000 - married filing jointly

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $48,000, the exemption amount is reduced by $1,000.

Connecticut Income Tax Rates

For 1998, the tax rates are 3% for the first

For 1999, the tax rates are 3% for the first 

Single or 
Married Filing Separately

$7,500 of the CT taxable income, and 4.5% of the excess over $7,500 $10,000 of CT taxable income, and 4.5% of the excess over $10,000

Head of Household

$12,000 of CT taxable income, and 4.5% of the excess over $12,000

$16,000 of CT taxable income, and 4.5% of the excess of $16,000

Married Filing Jointly

$15,000 of CT taxable income, and 4.5% of the excess over $15,000

$20,000 of CT taxable income, and 4.5% of the excess over $20,000

Tax Rate:  The chart above explains the changes to the tax rate for the 1998 and 1999 taxable years.  The change in the tax rate over the two-year period will reduce your Connecticut income tax.

Credits: You may be eligible for a personal tax credit of between 1% and 75%, depending on your income level.

A property tax credit is also available to individual Connecticut taxpayers for property taxes paid to a Connecticut political subdivision on a primary residence or on a motor vehicle, or both. Generally, this credit is allowed for property tax bills first becoming due during 1999 and paid during 1999.

This credit is also allowed for second or later installments of property tax paid during 1998, where the first installment first became due during 1998. The maximum credit allowed for the 1998 taxable year is $350 per return. Supplemental property tax bills first becoming due during 1998 and paid during 1998 also qualify for this credit. However, the payment of any delinquent property tax bills or the payment of interest, fees or charges related to the property tax bill do not qualify for this credit.

If you paid more than $100 in qualifying property taxes, you may be subject to a limitation depending on your filing status and your Connecticut adjusted gross income. See IP 97(9.1), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision, for more information.

Employers will withhold tax from the wages of residents and of nonresidents who work in Connecticut. After subtracting your Connecticut income tax withholding, if you expect to owe more than $500 for 1999, after taking any tax credits into account, and you expect your withholding to be less than your required annual payment, you must make estimated Connecticut income tax payments. 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 IP 92(5.8), Estimated Connecticut Income Taxes, and IP 93(6.5), A Guide to Calculating Your Annualized Estimated Income Tax Installments, for more information.

The Connecticut income tax return is due on or before April 15 for the preceding 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:

  • 19% of your adjusted federal alternative minimum tax; or
  • 5% of your adjusted federal alternative minimum taxable income.

The tax must be reported on Form CT-6251, Connecticut Alternative Minimum Tax Return - Individual. See IP 94(2.4), Q & A: The Connecticut Alternative Minimum Tax, for further information.


SUCCESSION TAX:  The Connecticut succession tax began to be phased out in 1997 and is scheduled for total repeal in 2005. For estates of decedents dying on or after January 1, 2001, any part of the net taxable estate passing to a Class A beneficiary will no longer be subject to the tax. For a Connecticut resident, the tax applies to all property, except for real property and tangible personal property which is located outside Connecticut.  For a nonresidents, it 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. There is a total exemption from tax if the entire estate passes to a surviving spouse. For information and tax tables applicable to estates of decedents dying during 1997 and thereafter, see SN 95(18), 1995 Legislative Changes Affecting the Succession and Transfer Taxes and the Estate Tax.


ESTATE TAX:  A sponge tax applies to resident and nonresident estates. For the resident estates, the sponge tax is the amount by which the federal credit allowed for state death taxes exceeds the total death taxes actually paid to all states. It applies only to estates required to file a federal Form-706, Federal Estate Tax Return.


GIFT TAX:  Residents are taxed on all gifts of intangible property and on gifts of real property and tangible personal property located in Connecticut. Nonresidents 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 $10,000. (For gifts made after 1998, this $10,000 amount may be adjusted based on the percentage by which the Consumer Price Index for the preceding calendar year exceeds the Consumer Price Index for calendar year 1997.)   Transfers of future interests are not covered by this $10,000 annual exclusion. The special valuation rules under Internal Revenue Code 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 and reserves 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.  For more details, see IP 99(9), A Guide to the Federal and Connecticut Gift Taxes, and Form CT-709, Connecticut Gift Tax Return.


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 contact the assessor in the city or town where the property is located or write to the Intergovernmental Policy Division, Office of Policy and Management, 450 Capitol Avenue, Mail Stop 54 FOR, Hartford, CT 06106-1308.

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 local assessor in your town or city hall 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 local assessor in your town or city hall for details and forms for any of the above.


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 to a corporation in exchange for shares of its stock (whether or not such shares are exchanged) is subject to real estate conveyance tax, as is a deed by a partner to a partnership or LLC as a contribution of partnership or LLC assets. (In those situations, the tax is based on the fair market value of the property.)   A deed for consideration or less than $2,000 in inconsideration 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:

Type of real estate Rate
Unimproved land 0.5%
Residential property (other than residential dwelling) 0.5%
Nonresidential property (other than unimproved land) 1.0%
Residential dwelling (portion not exceeding $800,000) 0.5%
Residential dwelling (portion exceeding $800,000) 1.0%
Property conveyed by a delinquent mortgagor* 0.5%

* If mortgage payments are more than six months delinquent and property is conveyed to a financial institution.

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: food; all purchases made with food stamps; utility charges for residential property; household fuel; prescription drugs; certain nonprescription drugs; clothing under $50; materials for noncommercial sewing used to make clothing; yarn; newspapers; magazine subscriptions.

When the seller of goods or provider of taxable services does not collect the sales tax, the buyer must pay a 6% use tax. Individuals must file a use tax return annually to report purchases of goods or services on which Connecticut sales tax was not paid. 

Typically, if you purchased goods from mail order or catalog companies and had the goods shipped to Connecticut or you purchased goods at out-of-state locations and brought those goods back into Connecticut you must pay the Connecticut use tax.  You must 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, on or before April 15.


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.


MOTOR FUEL TAX:  There is a state tax on all motor fuel used to propel highway vehicles.  This tax is included in the per gallon purchase price as calculated at the metered pump. The tax rate is 32 per gallon for gasoline, and 18 per gallon for diesel fuel.


MOTOR VEHICLE FEES:  There is a two-year registration fee of $70 for passenger cars. Upon renewal, there is an additional $4 Clean Air Act fee for all classes of motor vehicles. Operator licenses are issued every four years for $35.50. For general information, contact the Connecticut Department of Motor Vehicles at 1-800-842-8222.


BOAT REGISTRATION FEES:  There is an annual registration fee for boats in lieu of a local property tax. For information, contact the Department of Motor Vehicles at 1-800-842-8222.


ALCOHOLIC BEVERAGE AND CIGARETTES TAXES:  Alcoholic beverage, cigarette and tobacco products taxes are included in the retail selling price of such items. However, 6% sales and use taxes also apply at the time of sale.

Alcoholic beverage taxes are assessed as follows:

per wine gallon
distilled liquor     $4.50
fortified and sparkling wines  $1.50
still wines        $0.60
still wines (from licensed farm winery) $0.15
beer        $0.20
liquor coolers                        $2.05

Most alcoholic cider is taxed at the beer rate. See SN 97(6), 1997 Legislative Changes to the Alcoholic Beverages Tax Affecting Wines and Cider, for more information.

The cigarette tax is 50 per pack of 20. The tobacco products tax (excluding cigarettes) is 20% of the wholesale sales price.


ADMISSIONS, DUES AND CABARET 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. 

A 10% admissions tax applies to admission charges of $1 or more to places of amusement, entertainment or recreation. However, productions featuring live entertainment by actors or musicians at non-profit theaters and playhouses exempt under 501 of the Internal Revenue Code are exempt from the tax. Also exempt from the tax are admission charges of $4.50 or less to motion picture shows and admission charges to carnivals and amusement rides.

The Connecticut cabaret tax is a 5% tax imposed on all amounts charged for admission, food and drink, and service at any cabaret or similar place furnishing music, dancing privileges or any other entertainment for profit, during the time that the music, dancing or other entertainment is furnished.  See IP 97(7), Q & A:  The Cabaret Tax.


EFFECT OF THIS DOCUMENT: An Informational Publication (IP) is a document that addresses frequently-asked questions about a current Department position, policy or practice, usually in a less technical format.


EFFECT ON OTHER DOCUMENTS: IP 99(3) modifies and supersedes IP 92(3.5), Personal Taxes.


FOR FURTHER INFORMATION: Please call the Department of Revenue Services during business hours, Monday through Friday:

  • 1-800-382-9463 (toll-free within Connecticut), or
  • 860-297-5962 (from anywhere).
  • TTY, TDD, and Text Telephone users only may transmit inquiries 24 hours a day by calling 860-297-4911.

FORMS AND PUBLICATIONS: Forms and publications are available all day, seven days a week:

  • Internet: preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs
  • Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (toll-free within Connecticut) and select Option 2 from a touch-tone phone

IP 99(3)
Issued: 2/10/99
Replaces: IP 92(3.5) (Issued 1/27/98)