Connecticut sits in the northeastern US on the Atlantic Ocean. Covering just over 14,000 km², the "Constitution State" is the third-smallest state in the country and part of New England. It borders Massachusetts to the north, Rhode Island to the east, Long Island Sound to the south and New York to the west. More than half the state is forested, and the rest is a landscape of hills, lakes and plains. A relatively high share, over twelve percent, is covered by water. Connecticut is home to just over 3.5 million people.
As it has been for centuries, Connecticut is still the place for original ideas and fresh thinking. Fortune 500 companies and groundbreaking startups have a firm foothold here, alongside seasoned executives, rising innovators and a productive workforce.
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A prime location for domestic and international trade
Within 800 kilometers of Connecticut live 30% of the entire US population and two thirds of Canada's. The state's multimodal, multibillion-dollar investment strategy in transportation infrastructure will make that proximity even more profitable. The program covers improvements to highways, bridges, airports, rail and bus systems, and ports.
Connecticut's interconnected ports, railroads and highways are already excellent for moving goods and people. With three deepwater ports (Bridgeport, New Haven and New London), the state is ideally placed for domestic and international exports.
Innovation in its DNA
On land, at sea or in the air, Connecticut has long led the way in innovation. The first nuclear submarine, the first helicopter and the fuel cell that powered the first NASA spacesuit were all invented in the "Constitution State", an impressive track record.
But it's not just the past that impresses. Today, 14 of the nation's leading Fortune 500 companies are headquartered in Connecticut. World leaders in advanced manufacturing and emerging technologies are here. You can count on the second-best internet connectivity in the US (BroadbandNow, 2018). The state ranks fourth nationwide for investment in research and development (EMSI, 2019; AdvanceCT calculations).
There is a wide, high-quality network of innovation incubators and dozens of co-working spaces. Connecticut is a top destination for entrepreneurs launching new businesses, for highly skilled talent and for experienced professionals. The outlook is promising.
A highly productive workforce
Smart, resourceful people who think big and work hard: that's Connecticut's talent pool. U.S. Census Bureau data show the "Constitution State" has the third-highest share of adults with advanced degrees. It ranks fourth for workforce productivity. If Connecticut were its own country, it would rank sixth in the world on that measure.
Companies in life sciences, renewable energy, advanced manufacturing, digital media and information technology in particular offer promising careers for talented people with the skills and the drive to succeed. Their leading positions also draw the best and brightest from New York and southern Massachusetts to Connecticut.
The outlook for a steady supply of highly qualified professionals is good. Yale University, ranked the third-best university (U.S. News and World Report, Best Colleges 2020), is firmly rooted in Connecticut. So is Quinnipiac University, named the third most innovative in 2018 (U.S. News and World Report).
Income tax in Connecticut
Connecticut levies income tax from 2 to 6.99% depending on income (the lowest rates were cut to 2% and 4.5% for tax year 2024). On top of that, you pay federal income tax.
Corporate tax in Connecticut
Connecticut levies corporate tax of 7.5%; companies with gross income of 100 million dollars or more pay a 10% surtax on the tax. On top of that, you pay federal corporate tax.
Sales tax in Connecticut
The USA has no VAT on the European model. Instead, states, counties and municipalities levy a local sales tax on the sale of goods (but not services).
Connecticut sales tax rate
Connecticut's sales tax is 6.35% at the state level. Cities and counties do not levy sales tax.
Connecticut nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date:
December 1, 2018; amended effective July 1, 2019Included transactions:
- Before July 1, 2019: gross receipts from tangible personal property sold into the state, excluding sales for resale, provided the retailer regularly or systematically solicits sales in the state. Services are not included.
- As of July 1, 2019: gross receipts from tangible personal property or services; the regular or systematic solicitation requirement no longer applies.
Treatment of exempt sales:
- Before July 1, 2019: exempt sales count toward the sales threshold; sales for resale are excluded from the transaction test; exempt services are also excluded from the sales and transaction tests
- From July 1, 2019: exempt sales and exempt services count toward the sales threshold, as do sales through an online marketplace; exempt sales and exempt services (except sales for resale) are excluded from the transaction threshold
Trigger:
Sales and transaction volume
Sales/transaction threshold:
- Before July 1, 2019: gross receipts of $250,000 and 200 retail transactions
- As of July 1, 2019: gross receipts of $100,000 and 200 retail transactions
Evaluation period:
The threshold applies to all transactions in the 12-month period ending September 30 immediately preceding the monthly or quarterly period in which liability is determined.
Additional information:
- Registration requirements: Connecticut has not specified how quickly a remote business must register once it exceeds the economic nexus threshold.
- SB 417
- HB 7424
Connecticut marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
December 1, 2018
Economic nexus threshold:
At least 200 transactions and $250,000 in Connecticut gross receipts in the preceding 12-month period; the threshold changes to 200 transactions and $100,000 in sales from July 1, 2019. When calculating the threshold:
- Remote sellers should include sales through a marketplace
- Marketplace facilitators include all sales made through the marketplace
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register with the Connecticut Department of Revenue Services (DRS) and collect Connecticut sales tax on sales not taxed by a marketplace facilitator.
- Sales made through a collecting marketplace should be reported as gross sales and then deducted.
- Remote marketplace sellers: You must register with the Connecticut DRS.
- State that you sell only through a marketplace facilitator, and you will be registered for annual filing.
- Sales made through a collecting marketplace should be reported as gross sales and then deducted.
- In-state multichannel sellers: You must register and collect sales tax on sales not taxed by a marketplace facilitator.
- Sales made through a collecting marketplace should be reported as gross sales and then deducted.
- In-state marketplace sellers: You must register with the Connecticut DRS.
- State that you sell only through a marketplace facilitator, and you will be registered for annual filing.
- Sales made through a collecting marketplace should be reported as gross sales and then deducted.
- Learn more here.
Find more state profiles in our overview of all US states. Which state is right for your company? Our guide Which US state is best for your company? explains. And how to run a US LLC with no US presence completely tax-free is shown by our sister site zerotax.llc.
Our services for Connecticut:
Planning a business with ties to Connecticut? In a consultation, we'll work out which legal structure and which state of incorporation suit you. For a first overview, see our page on US company formation.