For entrepreneurs evaluating Connecticut as a business location in 2026, the tax landscape is a key factor. With a state sales tax of 6.35% and potential local additions of up to 0%, the combined rate can reach 6.35%.
Economic Nexus in Connecticut
Remote sellers must collect Connecticut sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2018-12-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Connecticut Department of Revenue Services enforces these provisions and provides registration guidance at https://portal.ct.gov/DRS.
LLC Formation in Connecticut (2026)
Forming an LLC in Connecticut costs $120 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $80. Connecticut imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Connecticut Department of Revenue Services.
Key Tax Rules
• Connecticut has a flat 6.35% state sales tax with no local additions.
• Luxury items over $1,000 are taxed at a higher 7.75% rate.
• Clothing and footwear under $100 are exempt from sales tax.
• Connecticut was an early adopter of economic nexus rules.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Connecticut: groceries, prescription drugs, clothing under $100, medical devices. Businesses should maintain proper documentation for exempt transactions.