Connecticut taxes consulting — what that does to your invoices
Send a Connecticut client an invoice for management consulting and you have to add 6.35% sales tax to it. Most of the country taxes goods and leaves professional services alone; Connecticut enumerates the services it taxes and the list reaches ordinary office work — business analysis, management consulting, public relations. Website work is taxable too, at a different rate. This page is about which of your invoices carry tax, at what rate, and what the rest of running a business here actually costs.
The question that decides your first year in Connecticut is not what it costs to form the company — $120, filed on Business One Stop, and it is the least interesting number on this page. It is whether what you sell is on the state's list of taxable services.
Four items on that list catch people who have consulted anywhere else: business analysis, management, management consulting and public relations services, all taxable at 6.35%. If you advise Connecticut businesses for a living, your invoice has a tax line on it. That is not true in most states, and it changes the conversation with a client who has been quoted a flat fee — the tax sits on top, they pay it, and you remit it. Get it wrong and you have collected nothing while still owing it.
- Sales tax
- 6.35% state · typically 6.35%
- Local income tax
- None
- State business licence
- Not required statewide
- Workers' comp from
- 1 employee
- Formation approved in
- Certificates of organisation are filed online through Business One Stop; Connecticut's published turnaround was not confirmed in this pass
- First 90 days, all in
- $250–$1,200 · $120 of it to the state
Official portals: Connecticut Business One Stop — online filing · myconneCT — Department of Revenue Services · Connecticut eLicense — Department of Consumer Protection. Figures checked September 2026; the portal always wins.
What Connecticut does not do is complicate it geographically. There is no town sales tax and no municipal income tax anywhere in the state, so 6.35% is the rate in all 169 towns and a business working across half of them files one return.
Two rates, one agency, one invoice
Connecticut does not use a single rate for services. Computer and data processing services — which the Department of Revenue Services reads to include website creation, hosting and maintenance, and electronically accessed software — are taxable at 1%, not 6.35%. That reduced rate has its own line on the return.
So a studio that redesigns a client's site and also writes them a positioning strategy has two rates on one job. Split the invoice and each part is taxed properly. Bundle it into one line called "consulting" and you have either overcharged the client by 5.35 points on the build or, more likely, underpaid the state on the advice.
| What you're selling | Rate |
|---|---|
| General goods and most taxable services | 6.35% |
| Management consulting, business analysis, public relations | 6.35% |
| Computer and data processing — websites, hosting, software | 1% |
| Meals and prepared food | 7.35% |
| Luxury goods — cars over $50,000, jewellery over $5,000, clothing over $1,000 | 7.75% |
| Short-term car rental | 9.35% |
None of these are things a town adds to. The rate you look up once is the rate for the whole state. If you are still setting your numbers, work out whether the tax sits on top of your price or inside it before you publish anything — the pricing page has the arithmetic, and doing it after the first ten clients have signed is a bad week.
The permit costs $100, and it comes first
Most states hand out a sales tax registration free. Connecticut charges $100 for the Sales and Use Tax Permit, applied for on myconneCT, and it has to be in place before the first taxable sale rather than before the first return. If your work is on the taxable list, budget for it alongside the filing fee.
If everything you sell is outside the list — and plenty is; Connecticut taxes an enumerated set of services rather than services in general — you do not need the permit at all, and the state asks nothing else of you beyond the annual report. The honest first move is to read the DRS list of services subject to sales and use taxes and find your own line of work on it or fail to. It takes ten minutes and decides whether you are a tax collector.
What the first employee switches on
Three things happen at once when you hire, and only one of them costs you money directly.
- CT Paid Leave — 0.5% of wages, withheld
- Register with the Connecticut Paid Leave Authority from the first employee and deduct 0.5% of wages up to the Social Security wage cap. The Authority's board held the rate at 0.5% for 2026. The employer contributes nothing of its own — but it is the employer who has to register, withhold correctly and remit, and the employee sees the deduction on the first payslip.
- Unemployment insurance — ReEmployCT
- Register with the Connecticut Department of Labor and report contributions quarterly. The exact wage-and-week test that makes an employer liable was not confirmed in our last check, so confirm your liability date with CTDOL rather than assuming it starts with the first paycheque.
- Workers' compensation — from employee one
- Every Connecticut employer must carry it, with no minimum headcount. The unusual part is the owners: officers of a corporation, LLC members and partners may elect to be excluded from the Act, and a sole proprietor has to actively accept the Act to count as an employer at all.
Notice what is missing from that list: a paid-leave levy on the employer. Connecticut's programme is entirely employee-funded, so beyond unemployment contributions and the comp premium — which every state charges in some form — the business adds nothing of its own. Vermont's employers pay 0.44% of payroll for child care and Massachusetts's pay 0.42% for paid leave once they pass twenty-five people. Connecticut's pay neither.
The towns don't tax income — they tax your desks
No Connecticut town or county levies an income tax, which is genuinely unusual for the region and means a business working in six towns still files one state return and nothing local. What towns levy instead is a personal property tax: an annual Declaration of Personal Property filed with the town assessor, listing the equipment, furniture and computers the business owns, taxed at that town's own mill rate.
Mill rates vary widely between towns and the declaration deadline is set locally, and we did not confirm either against a state source — so ring your assessor's office in your first month and ask two questions: what the deadline is, and what the mill rate is on personal property. Both answers take a phone call, and neither is something to discover from a bill.
The recurring state charge is small: an $80 annual report due March 31, online only. There is no franchise tax on the entity and no state business licence to hold — Connecticut licenses by occupation through the Department of Consumer Protection, and a business outside those categories needs nothing from the state beyond its tax registrations. The formation steps and every state's fees are on the LLC hub.
Common questions
Do I have to charge sales tax on consulting in Connecticut?
If what you sell is business analysis, management, management consulting or public relations services, yes — at 6.35%. Connecticut taxes an enumerated list of services rather than taxing services generally, so the answer depends on where your work falls on that list. Read the DRS page 'Services Subject to Sales and Use Taxes' and find your own line of work on it before you invoice.
Why is website work taxed at 1% instead of 6.35%?
Computer and data processing services — including website creation, hosting and maintenance, and electronically accessed software — sit at a reduced 1% rate with their own line on the return. A firm doing both strategy and build work has two rates on one job, so the invoice should be itemised.
How much does a Connecticut sales tax permit cost?
$100 for the Sales and Use Tax Permit, applied for on myconneCT. Most states issue one free, so it is worth budgeting alongside the $120 certificate of organisation. You only need it if you sell something taxable.
Is there a local sales tax or a city income tax in Connecticut?
No to both. 6.35% is the rate in all 169 towns, and no municipality levies an income tax. What towns do charge business is a personal property tax on equipment, declared each year to the town assessor at the town's own mill rate.
When do I have to carry workers' compensation in Connecticut?
From the first employee — there is no minimum headcount. Owners are treated differently from staff: corporate officers, LLC members and partners may elect to be excluded from the Act, and a sole proprietor must actively accept the Act to be treated as an employer at all.
What is the CT Paid Leave deduction and who pays it?
0.5% of wages up to the Social Security wage cap, withheld from the employee. The rate was held at 0.5% for 2026. The employer contributes nothing itself but must register with the Connecticut Paid Leave Authority from the first employee and remit what it withholds.
What does Connecticut charge every year to keep the company?
An $80 annual report, due 31 March and filed online. There is no franchise tax on the LLC itself and no general state business licence, so for most small companies that report is the whole of the recurring state bill.
Check the list before you send the first invoice.
Describe what you actually sell and Velofound lays out Connecticut's list beside a website that's already live and taking card payments into your own Stripe account. Free to start.
Start free →