The Tax Foundation

Tax Data

Connecticut

The Facts on Connecticut’s Tax Climate

Here are some basic facts on Connecticut’s tax system and how it compares to other states:

Tax Freedom Day Arrives on May 8 in Connecticut
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Connecticut taxpayers had to work until May 8 (the latest in the nation) to pay their total tax bill, 15 days later than the national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: New York, May 5 (ranked 3rd nationally), Massachusetts, April 28 (ranked 6th nationally) and Rhode Island, April 24 (ranked 13th nationally).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Connecticut's State/Local Tax Burden Above National Average in 2007
Over the past 19 years, Connecticut’s tax burden has risen from well below the national average in 1988—ranked 40th in the nation—to currently holding a place among the nation's highest-tax states. Estimated now at 12.2% of income, Connecticut’s state-local tax burden percentage stands at 8th highest, above the national average of 11.0%. Connecticut taxpayers pay $6,756 per capita in state and local taxes, and per capita state income is $55,536.
Connecticut's State-Local Tax Burden, 1970-present

Connecticut’s 2008 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 (48th), Massachusetts (34th), New Hampshire (7th), Vermont (44th) and Rhode Island (50th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth 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 34th highest among states levying an individual income tax. In 2005, individual income tax collections were $1,438 per person, which ranked 4th 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 2006, state-level corporate tax collections (excluding local taxes) were $181.18 per capita, ranked 15th highest among states that tax corporate income.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Connecticut Levies Sales Tax above 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 5.4%. In 2005, state and local governments combined collected $1,471 in general sales taxes, which ranked 10th highest nationally. Connecticut's gasoline tax stands at 44.1 cents per gallon (2nd highest nationally), while its cigarette tax stands at $2.00 per pack of twenty (4th 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 and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Connecticut Property Taxes Rank Among the Nation's Highest
Connecticut's local governments collected $6,801,676,000 in property taxes during fiscal year 2004, which is the latest year available from the Census Bureau. Connecticut is one of the 13 states that collect no state-level property taxes, meaning its per capita property tax collections equaled $1,944 for all levels of government in FY 2004, ranking it the 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

Tax Data from The Tax Foundation