TAX

INCREASE

Cigarette Tax

From $ . 40 to $ . 45 per pack as of 10/1/91

Motor Fuels Tax

Gasoline tax (per gallon) increases scheduled:

· $ . 23 to . 25 as of 9/1/91

· $ . 25 to . 26 as of 1/1/92

· $ . 26 to . 28 as of 1/1/93

· $ . 28 to . 29 as of 7/1/93

· $ . 29 to . 30 as of 1/1/94

· $ . 30 to . 31 as of 7/1/94

· $ . 31 to . 32 as of 1/1/95

· $ . 32 to . 33 as of 7/1/95

· $ . 33 to . 34 as of 1/1/96

Gasohol tax (per gallon) increase from $ . 22 to . 33 according to the above schedule

Petroleum Products Gross Earnings Tax

· Increase tax from 3% to 5% per quarter

· Expand tax to any company importing more than $ 100,000 worth of petroleum products into the state quarterly for its own use

Sales & Use Taxes

Increase tax from 8% to 12% for hotel and lodging house rooms

Admissions Tax

1993

Events at Beehive Stadium, O'Neill Center, Tennis Foundation, and New Britain Memorial Stadium

1994

Carnival and amusement park rides

1997

· Live performances at Candlewood Playhouse and Ocean Beach Park

· Movie charges under $ 4. 50

1999

· Movie charges under $ 5

· Events at Stafford Motor Speedway, Lime Rock Park, Thompson Speedway, Waterford Speed Bowl, Bridgeport Harbor Yard Stadium, and New Haven Ravens and Waterbury Spirits games

2000

· Events at Connecticut Expo Center

· Establishments formerly subject to cabaret tax

Cabaret Tax

1998

Places offering karaoke without paid entertainer and restaurants serving only beer or only beer and wine (Tax eliminated as of 7/1/99)

Corporation Tax

1993

Mutual funds and real estate investment trusts

1994

Cooperative housing corporations retroactive to 1990

1996

· Four-year phase-out of tax on subchapter S corporations by gradually reducing the percentage of their net taxable income as follows:

o 90% as of 1/1/97

o 75% as of 1/1/98

o 55% as of 1/1/99

o 30% as of 1/1/00

· S corporations exempt as of 1/1/01

· Out-of-state corporations if their only state contact is as a limited partner in an investment partnership

· Banks, insurers, and investment companies if (1) 100% of their business is conducted outside the US and (2) their headquarters are located in a special Hartford export zone

· Out-of-state companies whose only contact with state is a contract with Connecticut commercial printers

1998

· Passive investment companies

· Domestic insurers

1999

Capital gains from sale of open space or of land to the state, municipality, nonprofit conservation organization, or water company if it is permanently preserved as open space or Class I or II watershed land

Dues Tax

1999

· Private lawn bowling clubs

· Portion of dues paid by club members used to acquire open space

2000

Club locker rentals

Hospital Gross Receipts Tax

1997

Connecticut Children's Hospital

1999

John Dempsey Hospital (Tax eliminated as of 4/1/00)

Inheritance Tax

1993

Gifts not subject to state gift tax

Income Tax

1996

Income derived from foreign residents in connection with a company located in designated Hartford insurance and financial services export zone

1997

One-half of Social Security income taxable in 1998

1999

100% of taxable Social Security income for taxpayers with AGI under $ 60,000 for joint filers and $ 50,000 for singles

2000

· Holocaust settlement payments

· Interest earned on funds deposited in individual development accounts

Insurance Premiums Tax

1997

State Health Plan and federal Medicare policies

1998

Medicaid, HUSKY, and General Assistance health insurance policies

Motor Fuels Tax

1994

Alternative fuels sold to fleets covered by Clean Air Act from 7/1/94 to 6/30/99

1996

All alternative fuels until 7/1/01

1997

· Fuel used for federally funded Meals on Wheels programs

· Diesel fuel used for portable generators larger than 150 kw

1998

School bus fuel

1999

Extend alternative fuel exemption expiration to 7/1/02

2002

Extend alternative fuel exemption expiration to 7/1/04

Petroleum Products Gross Earnings Tax

1992

Bunker and marine diesel fuel oils and marine gas used in vessels with displacements of 4,000 dead weight tons or more

1993

Kerosene for home heating

1995

Earnings from sale of propane for motor fuel or nonresidential heating from 7/1/95 to 1/1/00

1996

No. 2 oil used in commercial fishing vessels

2000

Paraffin and microcrystalline waxes

2001

Extend exemption for propane used as motor vehicle fuel to 7/1/02

2002

· Fuel cell fuel until 7/1/04

· Extend exemption for propane used as motor fuel to 7/1/04

Public Service Companies Tax

1993

Phase-out tax on electricity and natural gas sold to manufacturers by 1% per year starting 1/1/94, with such sales exempt as of 1/1/98

1994

· Water companies

· Natural gas sold for motor vehicle fuel

1995

Propane sold for motor fuel as of 7/1/95

1996

Phase out tax on steam companies by 1% per year starting 7/1/96, with such companies exempt as of 7/1/00

2001

Extend exemptions for propane and natural gas motor fuels until 7/1/02

2002

Extend exemptions for propane and natural gas motor fuels until 7/1/04

Real Estate Conveyance Tax

1991

Transfers between certain tax-exempt corporations and transfers to nonprofit organizations that hold land in trust for conservation or recreation

1995

Conveyance of burial rights in cemeteries

1999

Conveyance of farmland development rights to the state

2000

Deeds of property for the Adraien's Landing and UConn stadium sites

Sales and Use Taxes

1991

· Architectural and building engineering, planning, and design services, including interior design and decorating

· Cooperative and direct mail advertising

· Sale, rental, and leasing of large commercial trucks, truck tractors, tractors, and semitrailers used to carry interstate freight

· Printing materials and equipment

· Manufacturing machinery components

· Licensed landscape architect services

· Public broadcasting equipment and equipment used to transmit medical and surgical training programs

· Coin-operated car washes

· Equipment associated with operating natural gas-powered vehicles purchased between 10/1/91 and 1/1/93

1992

· Government-owned recreation and amusement facilities retroactive to 10/1/91

· Amusement and recreation services subject to admissions or dues taxes

· Parking in lots owned or leased for at least 10 years by employers for exclusive use of employees

· Land surveying services

· Dancing lessons

· Athletic or sporting activities for adults (over age 19), other than swimming, provided by government, nonprofit charitable hospitals, or charitable and religious organizations

· Massage therapists

· Increase exemption for separately stated wages and fringe benefits of property management services employees from 95% to 100% and extend exemptions to all employees, not just those performing repair, maintenance, and other routine services to property (retroactive to 1/1/86)

· Commercial vehicles carrying more than 16 people or 9 students in addition to the driver

· Aviation fuel

· Commercial fishing vessels with coastwise fishing certificates from Coast Guard (retroactive to 10/1/91)

· Aircraft replacement parts and equipment and repair services and equipment

· Marine fuel oil for large vessels

· Motor vehicle equipment installed for exclusive use of a physically disabled person

· Returnable dairy products containers

· Computer and data processing services by a retailer who acquired the data processing facility after 7/1/91 from its data processing customer

Sales and Use Taxes

1993

· Free prescription drug samples provided by their manufacturers

· Materials and equipment used to make optical lenses

· Public and private campgrounds

· Car washingservice

· Valet parking at airports

· Wholesale auto auction sales agent services

· Amusement and recreation services

· Winter boat storage between 11/1 and 4/30

· Business-related tax preparation service

· Sales to nonprofit organizations at least 75% funded by the state or a municipality

· Custom-made wigs or hairpieces for permanent hair loss due to disease

· Hearing aid and apnea monitor repairs

· Equipment used directly to make or transmit finished films for t. v. and radio programs for accredited medical training

· Landscaping and horticultural, window cleaning, and maintenance services at the home of anyone receiving permanent and total Social Security disability benefits

· Sales to UConn Educational Properties, Inc. for use at the Connecticut Technology Park

· Commercial vehicles deriving at least 75% of their revenues from out-of-state trips

· Sales under $ 100 at any nursing home and elderly housing facility gift shop, if profits are used to benefit patients

· Sales to and by state-licensed nonprofit homes for the aged and nursing and rest homes

· Modular home resales

· Wages and fringe benefits for leased employees

· Mobile manufactured home resales in state-licensed parks (use tax)

· Farm sales tax exemption extended to contract farmers and those who raise and harvest fish

1994

· Services sold by community economic development affiliates to other affiliates

· Hazardous waste removal and environmental consulting services (retroactive to 7/1/89)

· Five-year phase-out of taxes on computer and data processing services - services to be exempt as of 7/1/01

· Health and recreation clubs

· Management and consulting services provided to limited partnerships by affiliates

· All tax preparation and auctioneer services

· Process control and material and product testing machines

· Aircraft trade-ins

· Sales to private water companies

· Safety apparel

· Puzzle magazines

Sales and Use Taxes

1995

· Blood plasma and oxygen for medical uses in people or animals

· Health aid device repairs

· Library support group book sales

· Municipal and library sales over $ 5

· Vending machine food products

· Motion picture and sound equipment

· Rare or antique coins

· Fuel for vessels primarily engaged in interstate commerce

· Material and services for Connecticut Resources Recovery Authority projects

· Off-duty police officers at construction sites

· Space in municipally operated railroad parking facilities located where air quality does not meet federal Clear Air Act standards

· Licensed hypertrichologists

· Certain motor vehicles declared as total loss

Exemption Delays:

· Computer and data processing services by one year until 1/1/02

· Until 7/1/97:

o tax preparation

o auctioneers

o safety apparel

o private water company purchases

o aircraft trade-ins

1996

· Machinery, equipment, tools, materials, supplies, and fuel bought by biotechnology companies

· Banks, insurers, and investment companies headquartered in Hartford export zone if all their business is outside the U. S.

· Phase-out tax on repairs or maintenance services to water transportation vehicles, except seaplanes - services exempt as of 7/1/99

· Services by out-of-state printing companies whose only Connecticut activities are contracts with in-state commercial printers to print and distribute printed material

· Trade-in allowance on remanufactured motor bus parts and components

· Machinery, equipment, tools, and materials used exclusively in commercial processing of photographic film and paper

· Livery services, including limousine and sedan car services

Sales and Use Taxes

1997

· Services to a low- or moderate-income housing facility sponsored by a mutual housing association

· Certain construction and renovation services to low- or moderate-income housing facilities

· Services and property sold to solid waste-to-energy facilities

· Services and property sold to tourism districts

· Vegetable seeds

· Yarn for noncommercial use

· Radio and t. v. station broadcast equipment - sales, storage, use, rental, or lease

· Sales by nonprofit organizations at up to five one-day bazaars, fairs, picnics, etc. per year

· Sales by historical societies

· Connecticut Development Authority sales of personal property and services

· Computer and data processing services in connection with the Internet

· All off-duty police and firefighter services

· Oxygen equipment bought or leased by veterinarians for use on animals

· Sale, storage, or use of aircraft with minimum takeoff weight of 6,000 pounds or more

· Replacement parts for all such aircraft

· Property purchased for out-of-state delivery or to be incorporated into such property

· Connecticut Children's Hospital patient care services

1998

· Newspapers sold over the counter

· Trade-in credits provided by retailers

· The face value of coupons

· State-mandated deposits, including those for beverage containers and batteries

· Repair and replacement parts for manufacturing as of 1/1/99

· Shipping charges on tax-exempt items

· Any new or remanufactured part for any item of tangible personal property

Sales and Use Taxes

1999

· Three-year phase-out of tax on residential paving, staining or painting, wallpapering, roofing, and siding or exterior sheet metal work - services exempt as of 7/1/01

· Personal property sold under leaseback agreements

· Inclined stairway chairlifts and their repair and replacement parts

· Repair and replacement parts for equipment used mainly by disabled people

· Labor on vessels

· Vessels sold to out-of-state residents who register them out-of-state

· Business services provided among affiliated businesses

· Personnel and business services to joint ventures formed to market and support new or experimental products or systems

· Training services provided by state-licensed or accredited colleges and universities

· Tangible personal property used in low- and moderate-income housing projects owned and operated by public housing authorities and services they obtain to develop and operate these projects

· More types of nonprescription drugs, including dietary supplements and asthma medicine

· Firearm safety devices, including safes, lock boxes, and trigger and barrel locks

· Bicycle helmets

· Railroad locomotives, track ballasts, ties, rails, and machinery and equipment for maintaining rights-of-way if used or operated exclusively for carrying freight

· Services for calibrating manufacturing machinery, equipment, or instruments

· Services or practices a business must obtain in order to register and comply with industry-set quality management and quality assurance standards

· Shoe repair services

· Services public utilities provide to the Department of Public Utility Control's "Call Before You Dig" Program

· Motor vehicles sold to limited liability companies or their members when a company is formed or dissolved if the vehicles' last sale was taxable

· Extend expiration of exemption for alternative fuel vehicles to 7/1/02

2000

· Items stored or shipped by fulfillment companies for unaffiliated out-of-state retailers

· Vending machine items costing less than $ . 50

· Clothing and footwear costing less than $ 75

· Clothing and footwear costing less than $ 300 from the third Sunday in August to the following Saturday ("sales tax free week")

· High-mileage cars until 7/1/02

· Child car seats

· College textbooks

· Closed-circuit television equipment used to help visually impaired people read

· Canes for invalids and handicapped people

· Medically necessary support hose

· Smoking cessation products

· Burial caskets

· Wages and benefits for employees paid under professional employee agreements

· High-speed data transmission equipment used by telecommunications and cable t. v. companies

· Internet access

Sales and Use Taxes

2001

· Parking in state-operated railroad parking facilities located in areas with substandard air

· Hospital patient care services from 7/1/01 to 7/1/03

· Material, equipment, tools and machinery used by fuel cell manufacturing facility

· Alternative fuel vehicle exemption extended to 7/1/02

· Caskets used for cremation

· Services provided between Indian tribes and their affiliated businesses

2002

· Certain aircraft-related services retroactive to 1/1/94

· Delay full exemption for computer and data processing services to 7/1/04

· Noncable communications services bought by cable t. v. companies

· Extend alternative fuel vehicle exemption expiration to 7/1/04

Admissions Tax

2000

Reduce tax on movie tickets over $ 5 from 10% to 8% as of 7/1/00 and to 6% as of 7/1/01

Corporation Tax

1991

Reduce tax surcharge from 20% to 10% as of 1/1/92 and eliminate surcharge as of 1/1/93

1993

Multi-year tax rate reduction:

· 11. 5% to 11. 25% as of 1/1/95

· 11% as of 1/1/96

· 10. 5% as of 1/1/97

· 10% as of 1/1/98

(Schedule modified in 1995 - see below)

1995

Multi-year rate reduction:

· 11. 25% to 10. 75% as of 1/1/96

· 10. 5% as of 1/1/97

· 9. 5% as of 1/1/98

· 8. 5% as of 1/1/99

· 7. 5% as of 1/1/00

1996

Allow regulated investment companies to use an alternative apportionment formula

1997

Allow certain companies to use single-factor apportionment for credit card income

1998

· Allow single-factor apportionment for financial services companies and exclude such companies from the capital base alternative

· Eliminate minimum tax for foreign corporations whose sole Connecticut activity is trading stocks and securities for their own accounts

1999

Extend the maximum length of net operating and capital loss carryovers from five to 20 years

2000

Allow manufacturers and broadcasters to use single factor apportionment starting 1/1/01 for manufacturers and 10/1/01 for broadcasters

Corporation Tax

1991

Up to 10% credit for natural gas vehicle operating costs for 1991 and 1992 income years

1992

· 20% research and development (R&D) credit - phased in 10% per year over two years starting 1/1/93 - Full credit starting 1/1/94

· 25% job training credit phased in 5% per year starting in 1995 - Full credit starting 1/1/99

· 25% credit for technology-related R&D grants to Connecticut colleges and universities

· Maximum 25% credit for up to seven years for new manufacturing or economic base industries, depending on facility size and number of new workers hired

1993

· 5% credit for small and 10% credit for medium-sized companies for increased machinery and equipment spending

· 1% to 6% credit for R&D spending

1994

· Increase credit for apprenticeship wages from $ 2. 40 to $ 4 per hour and maximum annual credit per apprenticeship from $ 3,000 to $ 4,800 per year

· 50% credit for expenses of traffic reduction program related to federal Clean Air Act

· Expand 5% credit for small companies' machinery and equipment spending to companies with up to 800 employees

· 100% credit for property taxes on electronic data processing equipment starting with taxes on 10/1/94 grand list

· 50% credit for certain alternative fuel vehicle expenses for 1994-98 income years

· 10%-20% credit for investments in Connecticut insurance companies through qualified insurance reinvestment funds (applies against corporation, insurance premium, and personal income taxes)

1995

· Delay start of Clean Air Act credit from 1/1/95 to 1/1/96 but make expenses during 1995 and 1996 eligible for a credit in 1997

· Defer start of small- and medium-sized company credit for machinery and equipment spending from 1/1/95 to 1/1/97

· Delay start of credit against insurance premium tax for electronic data processing equipment property taxes from 10/1/94 grand list to 10/1/96 grand list

· Modify 50% tax credit for firm moving to state that builds building of at least 900,000 square feet and locates at least 2,000 jobs in state to provide 40% credit for 1,600 jobs and 30% credit for 1,200 jobs

· Extend apprenticeship credit to qualified plastics trade apprenticeships

· Credit for firms investing in the Critical Industries Development Account

1996

· Job creation tax credit

· 10-year credit for new business locating in an enterprise zone that hires zone residents - credit is 100% for three years and 50% for seven years

· Expand alternative fuel vehicle credit

· Credit for parent education and child care programs

Corporation Tax

1997

· Establishes credits for fixed and human capital investments and phases credits in over three years as follows:

o 3% for 1998

o 4% for 1999

o 5% for 2000 and after

· Up to $ 1,000 per year credit for each construction trade apprenticeship

· Extend alternative fuel credit for two additional years

· Increase overall limit on Neighborhood Assistance Act credits from $ 3 million to $ 4 million

· Increase maximum Neighborhood Assistance Act tax credit a business can receive for certain employee child daycare facilities to $ 50,000

1998

· Extend R&D credit carry-forward to 15 years starting in 2000

· Extend 6% R&D credit to qualifying business with less than $ 100 million in gross income starting in 2000

· Give electric suppliers a one-time, $ 1,500 tax credit for each dislocated worker they employ for more than six months

1999

· Increase limit on overall Neighborhood Assistance Act credits from $ 4 million to $ 5 million

· Extend alternative fuel credits to 1/1/02

· Credit for guarantee fees paid when obtaining financing from the Small Business Administration

· Historic home rehabilitation credit - maximum $ 30,000 per home/ $ 3 million per year

· Permit companies with less than $ 70 million in gross sales to sell unused R&D tax credits to the state for 65% of their value

· Increase annual overall limit on low- and moderate-income housing program and Rental Housing Assistance Trust Fund credits from $ 1 million to $ 5 million

· 50% credit for land donated to state, municipality, or nonprofit land conservation organization for open space

· Allow S corporations to claim 100% of Neighborhood Assistance Act credits for the 1999 and 2000 income years, instead of 55% and 30% respectively

2000

· Credit for donating new or used computers to schools

· Allow S corporations to claim 100% of low- and moderate-income housing program credits for the 1999 and 2000 income years, instead of 55% and 30% respectively

· Credit for urban site remediation

· Apply human capital credit to contributions to individual development accounts

2001

Make investments in eligible environmental remediation and urban site reinvestment projects through community economic entities eligible for Urban & Industrial Site Remediation Fund credit

2002

Extend alternative fuel credit to 7/1/04

Income Tax

1994

· Restructure low income tax credit

· Credit for property tax paid on privately owned motor vehicle - phase-in starts 1/1/97

· 10-20% credit for investments in qualified insurance reinvestment fund

1995

Property tax credit up to $ 100

1997

Increase maximum property tax credit:

· From $ 100 to $ 215 as of 1/1/97

· To $ 285 as of 1/1/98

1998

Increase maximum property tax credit scheduled to take effect 1/1/98 from $ 285 to $ 350

1999

Increase maximum property tax credit:

· From $ 350 to $ 425 as of 1/1/99

· To $ 500 as of 1/1/00

Inheritance, Estate and Generation-Skipping Transfer Taxes

1993

Credit for state gift tax

Insurance Premiums Tax

2000

Credit for HMOs providing coverage under HUSKY programs equal to $ 55 per patient per month

2001

Increase HUSKY tax credit to $ 73. 50 per patient per month (Credit eliminated in 2002 - see Table 9)

Public Service Companies Tax

1994

100% credit for property tax paid on data processing equipment as of 10/1/94 grand list

1995

Delay property tax credit to 10/1/96 grand list property

1999

Historic home rehabilitation credit - maximum $ 30,000 per home/ $ 3 million per year

Sales and Use Taxes

2000

Credit for a qualified company selected by the commissioner of higher education on computer equipment it buys on or after July 1, 2000 to use in Connecticut for electronic commerce. Credit equals the resources company provides on or after July 1, 2000 to a Connecticut college or university for (1) designing, planning, building, or renovating buildings or classrooms; (2) acquiring computer equipment; or (3) acquiring property or licenses needed to operate computer programs used for student instruction in business studies related to electronic commerce or workforce development. The maximum credit is $ 2 million (later increased to $ 4 million)

Corporation Tax

1993

Eliminate deduction from gross income for non-life insurance company unpaid loss reserve adjustment

1997

· Eliminate credits for the following expenses:

o Air pollution

o Industrial waste

o Work education

o Employee training

o New facilities

· Eliminate deduction for home-grown cattle

· Limit credit for any single investment in an insurance reinvestment fund to $ 15 million

2000

Eliminate credits for investments in insurance reinvestment funds created after 7/1/00

2001

Eliminate credit for investments in insurance reinvestment funds as of 12/ 31/15

2002

Bar use of special federal bonus depreciation deductions

Require companies to pay $ 250 annual minimum tax regardless of credits

Limit annual credits to 70% of tax liability without credits

Limit annual R& D credit refunds to $ 1. 5 million per company for 2002 and after. Stretch out payment of unpaid 2000 and 2001 refunds greater than $ 1 million per company over up to three years.

Income Tax

1993

Establish alternative minimum tax (AMT) equal to 23% of federal AMT

1994

New AMT established - lesser of 19% of adjusted federal tentative minimum tax or 5% of adjusted federal AMT

2002

Individuals receiving income from business not covered by the corporation tax cannot deduct federal bonus depreciation allowance

Insurance Premiums Tax

2002

Eliminate HUSKY credit retroactive to 1/1/01 and replace with payments equal to 100% of credit for FY 02 and 25% for FY 03