Is Labor For House Remodeling Taxable In Connecticut?

Connecticut imposes a 6.35 sales and use tax on various services, with certain exceptions. Services in Connecticut are presumed to be exempt from the tax unless they are specifically identified as taxable in statute. Connecticut has specific tax laws that relate to home improvement labor, which can vary from other states. Contractors and homeowners need to navigate these regulations to ensure compliance.

To perform home improvement work in Connecticut, residential and restoration contractors must be aware of the provisions of the Connecticut Home Improvement Act. While several states don’t require construction companies to charge sales tax on their services, some states tax certain projects and not others. For example, Connecticut is a fairly easy state to comply with.

In general, installation services are not taxable when performed to owner-occupied residential property and new construction. Repair and maintenance services are also taxable. All retailers of a taxable item, either property or service, must charge and collect sales tax on taxable sales.

The general 4 rate applies to most construction services, including labor, but some construction services may qualify for a reduced rate of 0.5. If the owner lives or the residential property or is new construction, services are exempt from tax. Labor charges to install or repair items that become part of real estate, such as repairs to a water heater, boiler, or new roof, are not taxable.

In summary, Connecticut imposes a 6.35 sales and use tax on various services, with certain exceptions. Contractors and homeowners must navigate these regulations to ensure compliance with Connecticut’s specific tax laws.

What services are exempt from sales tax in CT?

Connecticut offers sales tax exemptions for various goods and services, including most food and beverages, prescription drugs, newspapers, magazines, and machinery used in manufacturing. Groceries are not taxable in Connecticut, but prepared meals, candy, and soft drinks are. Digital products, such as software, ebooks, music, and movies, are subject to sales tax at a rate of 6. 35 unless they fall under the 1 computer services category.

Are home improvements taxable in CT?

The Connecticut General Statutes, as amended by 1991 Conn. Pub. Acts 3, §103, and Conn. Agencies Regs. §12-407(i)(I)-1, treat the gross receipts from renovation and repair services provided in residential property as sales subject to the Sales and Use Taxes Act. Residential property includes real property used exclusively for residential purposes, including rental property with three or fewer dwelling units, one of which is owner-occupied.

The provision of renovation and repair services to income-producing property, where the cost was capitalized for federal income tax purposes, has been treated as a sale subject to the Sales and Use Taxes Act since July 1, 1989.

“Renovation” refers to the making of permanent improvements or betterments that increase the value and prolong the life of existing residential property, while “repair” refers to the mending, restoring, or maintaining of existing residential property.

Are maintenance services taxable in Connecticut?

The sale or purchase of maintenance, repair, or warranty contracts, or any combination thereof, is subject to the imposition of sales and use taxes under the laws of Connecticut. General Statute In accordance with Section 12-407(i)(GG) of the Connecticut General Statutes,

Are cleaning services taxable in CT?

Prior to July 1, 1989, janitorial services were subject to a similar treatment. Nevertheless, in accordance with section 12-407(i)(AA) of the Connecticut General Statutes and Public Act No. 89-251, such services are now subject to taxation in all instances, rendering one-time cleaning services liable to sales and use tax even prior to the issuance of a certificate of occupancy.

Is auto repair labor taxable in CT?

Since October 1, 1991, motor vehicle repair services have been treated as sales subject to the Sales and Use Taxes Act, regardless of whether the vehicle is used in a trade or business. This policy statement outlines rules that motor vehicle repairers must follow when charging sales and use taxes on their sales of repair parts and services, and making purchases that are exempt from sales and use taxes. Some rules have not been modified since July 1, 1989, while others were modified as of October 1, 1991, and will be modified as of October 1, 1992.

Is construction labor taxable in CT?

It is generally the case that services provided to commercial, industrial, and income-producing property, as well as some residential services, are subject to taxation. In order to comply with the relevant regulations, contractors are required to register with the Connecticut Department of Revenue Services.

What is not taxed in CT?

Connecticut General Statutes, Chapter 219, Sales and Use Taxes, imposes sales and use tax on gross receipts from the sale of tangible personal property at retail, rental or leasing of tangible personal property, and the rendering of certain services. Certain exemptions are provided under Conn. Gen. Stat. § 12-412, including food products sold through coin-operated vending machines, meals delivered to persons aged sixty or older, those with physical disabilities or homebound, and purchases made with supplemental nutrition assistance program benefits. An upcoming CT DRS webinar on October 16, 2024, will discuss these exemptions. For a complete list of sales exempt from Connecticut sales and use taxes, refer to the Connecticut General Statutes.

Is engineering services taxable in CT?

In Connecticut, sales tax is not levied on most service-based transactions, except for certain situations like advertising, computer and data processing, credit information and reporting, exterminating services, dry cleaning services, management, Software-As-A-Service (SaaS)/Digital Products, and shipping/handling charges. These services are taxable in Connecticut at a rate of 1 for the sale of computer and data processing services, including digital downloads and streaming services. The tax applies only to shipping charges for taxable items and not to tax-exempt items.

Is landscaping taxable in CT?

Landscaping services include planting trees, shrubs, and sod, which are taxable in new construction, residential real estate, and income-producing properties. Excavating and rough grading services are not taxable, but are taxable if they are integral to landscaping jobs. Excavating and grading services provided to landscapers are subject to sales tax unless they issue a bonafide resale certificate. In ground sprinkler systems, ground lighting, sidewalks, and amosite parking are not taxable when performed on new construction, under Section 12-407(i)(I) of the Connecticut General Statutes.

What is the 7.35% tax in Connecticut?

Connecticut’s restaurant tax rate, also known as the Connecticut prepared food tax, was introduced in 2019 and is added to the state’s base sales tax rate of 6. 35. This tax applies to food and beverages sold for human consumption at the seller’s location, as well as food products in forms and portions that make them ready for immediate consumption. Connecticut also taxes most clothing at the state’s base sales tax rate of 6. 35, adding a surcharge on luxury items.