Research Areas
Connecticut
The Facts on Connecticut’s Tax Climate
Last updated July 1, 2009.
Here are some basic facts on Connecticut’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 30 in Connecticut, Latest in the Nation
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Connecticut taxpayers had to work until April 30 (the latest in the nation) to pay their total tax bill, 17 days later than the national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are: New York, April 25 (ranked 3rd nationally), Massachusetts, April 16 (ranked 7th nationally) and Rhode Island, April 4 (ranked 10th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Connecticut's State/Local Tax Burden Third-Highest in Nation
Connecticut, currently ranked 3rd highest, has risen 21 places over the last three decades and now holds a place among the nation's highest-tax states. Estimated at 11.1% of income, Connecticut's state/local tax burden percentage stands well above the national average of 9.7%. Connecticut taxpayers pay $7,007 per capita in state and local taxes.
Connecticut's State-Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Connecticut’s 2010 Business Tax Climate Ranks 38th
Connecticut ranks 38th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: New York (49th), Massachusetts (36th), New Hampshire (7th), Vermont (41st) and Rhode Island (44th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Connecticut's Individual Income Tax System
Connecticut's personal income tax system consists of two separate brackets with a top rate of 5% kicking in at an income level of $10,000. That top rate ranks 30th highest among states levying an individual income tax. In 2006, individual income tax collections were $1,655 per person, which ranked 3rd highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Connecticut's Corporate Income Tax System
Connecticut's corporate tax structure consists of a flat rate of 7.5% on all corporate income. Among states levying corporate income taxes, Connecticut's rate ranks 22nd highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $236 per capita, ranked 9th highest among states that tax corporate income.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita
Connecticut Levies Sales Tax at National Median; Gasoline and Cigarette Taxes among Nation's Highest
Connecticut levies a 6% general sales or use tax on consumers, above the national median of 6%.In 2006, state and local governments combined collected $871 in general sales taxes, which ranked 23rd highest nationally. Connecticut's gasoline tax stands at 36.4 cents per gallon (4th highest nationally), while its cigarette tax stands at $2.00 per pack of twenty (9th highest). Additionally, Connecticut levies a 5.8% gross receipts earnings tax on oil companies, which is collected at wholesale. The sales tax was adopted in 1947, the gasoline tax in 1921 and the cigarette tax in 1935.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita
Connecticut Property Taxes Rank Among the Nation's Highest
Connecticut's local governments collected $2,167.29 per capita in property taxes during fiscal year 2006, which is the latest year available from the Census Bureau. Connecticut is one of the 13 states that collect no state-level property taxes. Its property tax collections per capita rank 2nd highest nationally, behind only New Jersey.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Connecticut Is a Donor State
Connecticut taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Connecticut citizens received approximately $0.69 in the way of federal spending. This ranks the state 3rd lowest nationally, slightly higher than in 1995 when Connecticut ranked last, receving $0.68 in federal spending per dollar of taxes. Neighboring states and the federal spending received per dollar of federal taxes collected were: New York ($0.79), Massachusetts ($0.82), New Hampshire ($0.71), Vermont ($1.08) and Rhode Island ($1.00).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
