Connecticut offers a vibrant environment for entrepreneurs, with over 381,000 small businesses employing about 48% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Connecticut is crucial. This guide provides an overview of the various taxes small businesses in Connecticut must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Connecticut
Business owners in Connecticut may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, LLCs with C corp elections
Tax Rate: 7.5%, $250 minimum (plus a surcharge of 10% of the tax for certain large corporations)
Filing Requirements: File Form CT-1120 by the 15th day of the month after the federal tax return is due.
Estimated Payments: Required if liability exceeds $1,000. Payments are due quarterly by the 15th day of the third, sixth, ninth, and twelfth months of the tax year.
Connecticut Composite Income Tax
Applicable Entities: S corporations, partnerships, and LLCs treated as partnerships doing business in or generating income or loss from sources within Connecticut
Tax Rate: 6.99%
Filing Requirements: File Form CT‑1065/CT‑1120SI by the 15th day of the third month after the end of the tax year.
Pass-Through Entity (PTE) Tax
Applicable Entities: S corporations, partnerships, and LLCs treated as partnerships doing business in or generating income or loss from sources within Connecticut
Tax Rate: 6.99%
Filing Requirements: Since January 1, 2024, the pass-through entity tax is optional. Any entity that elects to pay must elect to file by checking a box at the bottom of their timely filed Form CT-1065/CT-1120SI. They then file Form CT-PET by the 15th day of the third month after the end of the tax year.
Estimated Payments: Required if liability exceeds $1,000. Payments are due quarterly by April 15, June 15, September 15, and January 15.
Sales and Use Tax
Applicable Activities: Sales and rentals of physical and digital goods, certain services
Tax Rate: 6.35%
Filing Requirements: File Form OS-114 monthly, quarterly, or annually based on sales volume.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Varies
Filing Requirements: File Form CT-941 online by April 30, July 31, October 31, and January 31.
Estimated Payments: Payments are due weekly, monthly, or quarterly based on withholding amounts.
Unemployment Insurance Tax
Applicable Entities: Employers with employees
Tax Rate: 1.1%–8.9%, based on the business’s experience rating
Wage Base: First $26,100 of wages per employee per year
Filing Requirements: File quarterly reports online by April 30, July 31, October 31, and January 31.
Personal Property Tax
Applicable Entities: Businesses using personal property
Tax Rate: Based on property type and value
Filing Requirements: Report annually to the county assessor by November 1.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 6.99% on distributive share income
Filing Requirements: File Form CT‑1065/CT‑1120SI by the 15th day of the third month after the end of the tax year.
How to File and Pay Connecticut Business Taxes
Business taxes in Connecticut can be filed and paid through various methods.
Online Filing and Payment: Use myconneCT for electronic submissions and payments.
Mail: Send forms and payments to the indicated address (where available).
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the month after the federal tax return is due
Estimated Tax Payments: Due quarterly by the 15th day of the third, sixth, ninth, and 12th months of the tax year
Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume
Withholding Tax Returns: Due quarterly by April 30, July 31, October 31, and January 31.
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Connecticut offers several tax credits and incentives for small businesses, including:
Human Capital Investment Tax Credit: This is a 10% credit for amounts paid on “human capital investments,” including in-state job training, work education programs, and donations to institutions of higher education, and a 25% credit for amounts paid for child care facilities or subsidies.
Fixed Investment Credit: Corporations can receive a 5% credit for any new fixed capital investment used in business for at least five years, among other criteria.
Student Loan Repayment Credit: This is a 50% credit of the amount of employer payments made to any student loan services or education loans on behalf of a qualified employee, up to $2,625 per qualified employee.
Research and Development Tax Credit: This is available for both incremental increases in qualified research costs (20% of the increased costs from the prior year) and qualified research and development costs incurred in Connecticut (6% for qualified small businesses; credit amount varies for larger businesses).
Read more about Connecticut business tax incentives here.
Connecticut’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down the taxes different business structures usually pay.
Remember that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | PTE election tax | Corporate income tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making the PTE election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTE election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTE election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Connecticut small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
Connecticut Small Business Taxes: The Employer’s 2024 Guide
Connecticut offers a vibrant environment for entrepreneurs, with over 354,000 small businesses employing about 47% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Connecticut is crucial. This guide provides an overview of the various taxes small businesses in Connecticut must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Connecticut
Business owners in Connecticut may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, LLCs with C corp elections
Tax Rate: 7.5%, $250 minimum (plus a surcharge of 10% of the tax for certain large corporations)
Filing Requirements: File Form CT-1120 by the 15th day of the month after the federal tax return is due.
Estimated Payments: Required if liability exceeds $1,000. Payments are due quarterly by the 15th day of the third, sixth, ninth, and 12th months of the tax year.
Pass-Through Entity (PTE) Tax
Applicable Entities: S corporations, partnerships, and LLCs treated as partnerships
Tax Rate: 6.99%
Filing Requirements: File Form CT‑1065/CT‑1120SI by the 15th day of the third month after the end of the tax year.
Estimated Payments: Required if liability exceeds $1,000. Payments are due quarterly by April 15, June 15, September 15, and January 15.
Sales and Use Tax
Applicable Activities: Sales and rentals of physical and digital goods, certain services
Tax Rate: 6.35%
Filing Requirements: File Form OS-114 monthly, quarterly, or annually based on sales volume.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Varies
Filing Requirements: File Form CT-941 online by April 30, July 31, October 31, and January 31.
Estimated Payments: Payments are due weekly, monthly, or quarterly based on withholding amounts.
Unemployment Insurance Tax
Personal Property Tax
Applicable Entities: Businesses using personal property
Tax Rate: Based on property type and value
Filing Requirements: Report annually to the county assessor by November 1.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 6.99% on distributive share income
Filing Requirements: File Form CT‑1065/CT‑1120SI by the 15th day of the third month after the end of the tax year.
How to File and Pay Louisiana Business Taxes
Business taxes in Louisiana can be filed and paid through various methods.
Online Filing and Payment: Use myconneCT for electronic submissions and payments.
Mail: Send forms and payments to the indicated address (where available).
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the month after the federal tax return is due
Estimated Tax Payments: Due quarterly by the 15th day of the third, sixth, ninth, and 12th months of the tax year
Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume
Withholding Tax Returns: Due quarterly by April 30, July 31, October 31, and January 31.
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Connecticut offers several tax credits and incentives for small businesses, including:
Human Capital Investment Tax Credit: This is a 10% credit for amounts paid on “human capital investments,” including in-state job training, work education programs, and donations to institutions of higher education, and a 25% credit for amounts paid for child care facilities or subsidies.
Fixed Investment Credit: Corporations can receive a 5% credit for any new fixed capital investment used in business for at least five years, among other criteria.
Student Loan Repayment Credit: This is a 50% credit of the amount of employer payments made to the Connecticut Higher Education Supplemental Loan Authority for education loans on behalf of a qualified employee, up to $2,625 per qualified employee.
Research and Development Tax Credit: This is available for both incremental increases in qualified research costs (20% of the increased costs from the prior year) and qualified research and development costs incurred in Connecticut (6% for qualified small businesses; credit amount varies for larger businesses).
Read more about Connecticut business tax incentives here.
Connecticut’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down the taxes different business structures usually pay.
Remember that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | PTE election tax | Corporate income tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making the PTE election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTE election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTE election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Connecticut’s small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
