Connecticut has a detailed corporate and individual tax framework that requires strict compliance by businesses and pass-through entities operating in the state. The system revolves around the Corporate Income Tax, Exempt Entities, Filing Requirement, Estimated Tax Payments, and the Pass Through Entity Tax.
Every corporation carrying on business in Connecticut must register and file Form CT-1120. The state imposes a flat corporate income tax rate of 7.5% of net income, computed either on a net income basis or a capital stock basis, whichever results in higher liability. A minimum tax of USD 250 applies. Entities engaged in business by owning property, maintaining offices, or even holding inventory in warehouses are considered taxable.
Certain entities are exempt but must still file to claim the exemption, while others are completely exempt from filing. Corporations must comply with electronic filing rules, with original and extended deadlines tied to federal filing dates. Estimated tax payments are mandatory for entities with tax liabilities exceeding USD 1,000, calculated through four installments across the year.
Pass-through entities and individuals are taxed under Connecticut’s personal income tax regime, with rates ranging from 3% to 6.99%. These taxpayers must file Form CT-1040 or CT-1040NR/PY, with extensions available under Form CT-1127. Penalties for late filing or underpayment are strict, including interest of 1% per month.
In short, Connecticut’s compliance system balances corporate-level taxation with personal-level obligations for pass-through entities, ensuring broad tax coverage.
Corporate Income Tax
Every corporation—or association taxable as a corporation—that does business in Connecticut or has the right to carry on business must register and file Form CT-1120, Corporation Business Tax Return. This applies even if a corporation has dissolved or withdrawn; the obligation continues up to the date of dissolution or withdrawal.
The corporate income tax is charged at a flat rate of 7.5% of net income. However, tax is calculated both on net income and on capital stock, and the higher of the two is payable. A minimum tax of USD 250 applies regardless of income.
Activities that qualify as carrying on business include:
- Owning or leasing real property
- Maintaining an office in Connecticut
- Selling tangible personal property
- Soliciting or performing services
- Selling or soliciting orders for real property
- Storing inventory in public warehouses
- Consigning merchandise to distributors or dealers
- Owning or leasing personal property unrelated to solicitation of orders
- Participating in approval of servicing distributors or dealers for product repair or servicing
Right to carry on business includes:
- Domestic companies whose certificate of incorporation has been endorsed by the Secretary of State
- Foreign companies authorized by the Secretary of State through a certificate of authority
This wide definition ensures nearly all corporations with any economic presence in Connecticut fall under the corporate income tax regime.
Exempt Entities
Not all corporations are subject to Connecticut’s corporate income tax. Exemptions fall into two categories: entities that must still file Form CT-1120 to claim exemption, and those fully exempt from both the tax and filing.
Exempt but filing required (must file CT-1120):
- Homeowner’s associations recognized for federal purposes
- Certain political organizations exempt under federal law
- Financial services companies headquartered in Hartford’s export zone conducting business entirely outside the U.S.
- Passive investment companies (PICs)
Exempt and no filing required:
- Insurance companies, both domestic and foreign
- Companies exempt under federal net income tax law
- Domestic International Sales Corporations (DISCs) with valid elections
- Companies subject to gross earnings tax or with properties operated by railroads
- Cooperative housing corporations
- Corporate limited partners in investment partnerships not otherwise doing business in Connecticut
- Non-U.S. corporations whose only activity in the state is trading stocks, securities, or commodities for their own account
These exemptions reflect the state’s effort to avoid double taxation and align with federal rules.
Filing Requirement
Filing rules are tied to the corporation’s year-end and federal deadlines.
| Year End | Original Due Date | Extended Due Date |
| June 30 | 15th day of 4th month after year end | 15th day of 11th month after year end |
| Anything except June 30 | 15th day of 5th month after year end | 15th day of 11th month after year end |
For calendar year corporations, this means the due date is May 15. If the due date falls on a weekend or holiday, the return is due the next business day.
All corporations must file electronically. To request an extension, corporations must file Form CT-1120 EXT. The extension provides extra time to file but not to pay, so taxes must still be paid by the original due date to avoid penalties.
Estimated Tax Payments
Corporations with annual tax liabilities exceeding USD 1,000 must make estimated tax payments in four installments:
- First installment: Lesser of 30% of prior year tax or 27% of current year tax
- Second installment: Lesser of 70% of prior year tax or 63% of current year tax
- Third installment: Lesser of 80% of prior year tax or 72% of current year tax
- Fourth installment: Lesser of 100% of prior year tax or 90% of current year tax
Installments are due on April 15, June 15, September 15, and January 15 of the following year.
All estimated payments must be filed and paid electronically.
Penalties:
- Late or underpaid tax: 10% of tax due or USD 50, whichever is greater
- Interest: 1% per month or fraction of a month until paid in full
The rules encourage accurate planning and timely payment throughout the year.
Pass Through Entity Tax
Connecticut applies its personal income tax to individuals, including owners of pass-through entities such as partnerships, sole proprietorships, LLCs taxed as partnerships, and S corporations.
Rates range from 3% to 6.99% depending on income levels.
Forms & Filing:
- Residents: Form CT-1040
- Non-residents/part-year residents: Form CT-1040NR/PY
- Estimated tax: Form CT-1040ES
Due Date:
- April 15 each year, or the next business day if it falls on a weekend or holiday
Estimated Tax:
If an individual expects to owe more than USD 1,000, estimated payments must be made on April 15, June 15, September 15, and January 15 of the following year.
Extensions:
Individuals and pass-through entities can file Form CT-1127 to request a six-month extension for filing returns.
Penalties:
- Late or underpaid tax: 10% of the amount due
- If no tax is due but return is late: USD 50 penalty
- Interest: 1% per month on unpaid balances
This ensures that owners of pass-through entities remain accountable for their share of business income.
Conclusion
Connecticut’s tax compliance framework is extensive and requires businesses and individuals to carefully manage both corporate and personal obligations. Corporations face a 7.5% corporate income tax, with liability determined by the higher of net income or capital stock basis. A minimum tax of USD 250 ensures all corporations contribute. Exemptions exist but require careful classification.
Corporations must adhere to electronic filing deadlines aligned with federal rules and make quarterly estimated payments if liabilities exceed USD 1,000. Meanwhile, owners of pass-through entities are taxed under Connecticut’s personal income tax, with rates from 3% to 6.99%, along with their own estimated payment obligations.
Penalties and interest for late filings or payments are strict, reinforcing the need for proactive compliance. Together, these rules underline Connecticut’s commitment to a structured tax regime that captures revenue while offering clarity to taxpayers.
