Connecticut Legislative Changes Effective this Fall

Several new laws will go into effect as of October 1, 2019. Some of these include:

  • Increase in the minimum wage. The minimum hourly wage increases from $10.10 to $11 today, and then by another $1 every 11 months until it reaches $15 on June 1, 2023.
  • Increase in the minimum age to purchase cigarettes. The legal age for purchasing cigarettes, tobacco products, and vaping products will now be 21. The cigarette dealer licensing fees also increases, and a new vaping tax goes into effect.
  • Single-Use Plastic Bag Fee. This fee went into effect on August 1, 2019 but is still worth talking about. Retailers making sales in Connecticut of tangible personal property to the public are required to collect 10¢ per single-use plastic checkout bag.
  • Transportation network company fee. The per ride fee for rides with transportation network companies such as Uber or Lyft increases from 25¢ to 30¢ on July 1, 2019.
  • Increased taxes on alcohol sales. The excise tax on all alcohol sales, except beer, will increase by 10% as of October 1, 2019.
  • Sales tax changes. The economic nexus threshold for requiring remote sellers to collect and remit sales tax will be reduced on July 1, 2019, to $100,000 of sales and 200 or more transactions. On October 1, 2019, the rate on digital goods will increase to 6.35%, the rate on meals will increase by 1%, and the marine dock dyed diesel rate will be reduced to 2.99%. On January 1, 2020, safety apparel, metered and other previously exempt parking, dry cleaning and laundry (other than coin operated) will be taxable. On that date interior design services for individuals will also become taxable.
  • New requirements for remote sellers. As of July 1, 2019, the economic nexus threshold for remote sellers decreases to $100,000 in sales and at least 200 transactions in a 12-month period.  If this threshold is met, the retailer must collect and remit Connecticut sales tax.
  • Prepared foods. Increase in tax on restaurant meals and prepared foods. Meals and beverages sold by a caterer, eating establishment, or grocery store are subject to an extra 1 percent tax starting October 1, 2019, for a total rate of 7.35 percent.
  • Vehicle trade-in fee. The fee charged by the state to car dealers when someone trades in a vehicle will increase from $35 to $100 per transaction.
  • Digital downloads. Taxes on digital downloads and streaming services will rise from 1% to 6.35%.
  • Pass-through entity tax changes. The tax base expanded to include guaranteed payments. Entities with less than $1,000 in annual PE tax liability are exempt from required quarterly estimated tax payments. The pass-through entity tax credit is reduced to 87.5%.
  • Corporation business tax changes. The corporate income tax 10% surcharge is extended for two more years and the capital base tax will be phased out over four years from 2021 to 2024.
  • Income tax changes. The income tax exemption for teacher’s retirement payments remains at 25%. The exemption was due to increase from 25% to 50% for 2019 and subsequent tax years. The new law instead maintains it at 25% for 2019 and 2020 and increases it to 50% beginning in 2021.

For additional information, please see the Connecticut General Assembly website.

 

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