Connecticut: Sales Tax Handbook
What purchases are taxable in Connecticut?
The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the Connecticut sales tax.
Contents1.) Taxability of Goods and Services
- General Connecticut taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
Section 1: Taxability of Goods and Services
What transactions are generally subject to sales tax in Connecticut?
In the state of Connecticut, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of exceptions to this tax are certain types of safety gear, some groceries, certain types of clothing, children's car seats, children's bicycle helmets, college textbooks, compact fluorescent light bulbs, most types of medical equipment, and certain motor vehicles.
This means that someone in the state of Connecticut who sells leather purses would be required to charge sales tax, but an individual who sells textbooks intended for college students might not be required to charge sales tax.
Are services subject to sales tax in Connecticut?
The state of Connecticut does not usually collect sales taxes from the vast majority of services performed. An example of taxed services would be one which manufactures or creates a product.
This means that a yoga instructor would not be required to collect sales tax, while a someone working in the creation of clothing may be required to collect sales tax.
You can find a table describing the taxability of common types of services later on this page.Top
Are shipping & handling subject to sales tax in Connecticut?
Connecticut has very simple rules when it comes to taxes on shipping. Essentially, if the item being shipped is considered to be taxable in Connecticut, then the shipping is seen as being taxable as well. If the item being shipped is not legally taxable, then the shipping charge should not be taxed.Top
Are drop shipments subject to sales tax in Connecticut?
"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In Connecticut, drop shipments are generally exempt from sales taxes. The individual identified as the drop shipper is required to collect tax only if the customer is not considered to be ""engaged in business"" in Connecticut. However, the Connecticut Supreme Court has firmly maintained that a drop shipper did not deliver any sold items in Connecticut, where property was shipped involving a ""Free on Board"" factory.
Section 2: Taxability of Various Items in Connecticut
This table shows the taxability of various goods and services in Connecticut. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.
|Products on Amazon.com||TAXABLE *|
|General Clothing||TAXABLE *|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Raw Materials||EXEMPT *|
|Utilities & Fuel||EXEMPT *|
|Medical Goods and Services|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT *|
|Motor Vehicles||TAXABLE *|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||TAXABLE|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||EXEMPT *|
|Pollution Control Equipment|
|General Pollution Control Equipment||TAXABLE *|
|Janitorial Services||TAXABLE *|
|Transportation Services||EXEMPT *|
|Software and Digital Products|
|Canned Software - Delivered on Tangible Media||TAXABLE|
|Canned Software - Downloaded||TAXABLE *|
|Custom Software - Delivered on Tangible Media||TAXABLE *|
|Custom Software - Downloaded||TAXABLE *|
|Customization of Canned Software||TAXABLE *|
|Digital Products||TAXABLE *|
|Vending Machine Sales|
* See notes in category taxability page for details
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