SALES AND USE TAX EXEMPTIONS |
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By: Rute Pinho, Principal Analyst |
ISSUE
Provide a list of goods and services exempt from the state sales and use tax. This report updates OLR report 2011-R-0276.
SUMMARY
The state imposes sales and use taxes on retail sales of tangible personal property and services. It imposes a 6.35% tax, with some exceptions, on the retail sales of tangible personal property purchased (1) in Connecticut (i.e., sales tax) or (2) outside Connecticut for use here (i.e., use tax). These taxes apply to any item of tangible personal property, unless the law expressly exempts it. Table 1 lists the exempted items.
The state similarly imposes a 6.35% tax, with some exceptions, on services provided by companies doing business in the state, regardless of whether they are located here. Unlike the statutes imposing the sales and use tax on tangible personal property, those imposing the tax on services specify the types of services subject to the tax and, within each type, the ones exempted from it. Tables 2 and 3 list the services subject to and exempted from the tax, respectively.
There are exceptions to the 6.35% sales and use tax rate for certain goods and services. The rate is:
1. 7% on certain “luxury” motor vehicles, jewelry, clothing, and footwear;
2. 4.5% on motor vehicles purchased by active duty U.S. military members stationed in Connecticut;
3. 1% on computer and data processing services;
4. 15% on short-term stays in hotels and lodging houses; and
5. 9.35% on short-term car rentals.
Table 1: Exemptions for Tangible Personal Property
EXEMPTION |
STATUTORY CITATION |
PUBLIC, NONPROFIT, AND CHARITABLE ENTITIES | |
Sales to federal, state, and municipal governments (including goods and services used in building the Hartford convention center, Rentschler Field, and Connecticut Center for Science and Exploration) |
12-412 (1) |
Sales to and by nonprofit charitable hospitals, nursing homes, rest homes, residential care homes |
12-412 (5) (A) |
Sales by nonprofit organizations on hospital premises |
12-412 (5) (B) |
Sales to and by certain acute care hospitals operating as sole community hospitals (terminates in FY 17) |
12-412 (5) (C) |
Sales of goods and services to and by nonprofit organizations exempt from federal income tax |
12-412 (8) |
Municipal publications |
12-412 (24) |
Items sold by public libraries |
12-412 (24) |
Property sold at auction by a municipality |
12-412 (24) |
Library support groups book sales |
12-412 (24) |
Items sold for $20 or less by charitable organizations and schools to support youth activities |
12-412 (26) |
Property and services used in developing, rehabilitating, renovating, repairing, and operating low- and moderate-income housing facilities |
12-412 (29) |
Items and services sold to senior centers |
12-412 (35) |
Items sold for $100 or less by gift shops located in nursing, rest, residential care, or convalescent homes and adult day care centers, if the profits benefit patients or users |
12-412 (56) |
Items and services sold to University of Connecticut Educational Properties, Inc. for the Connecticut Technology Park |
12-412 (84) |
Items or services sold to tourism districts |
12-412 (93) |
Goods sold by nonprofit organizations at five one-day events during a single year |
12-412 (94) |
Items sold by historical societies |
12-412 (98) |
CONSUMER GOODS | |
Clothing and footwear costing less than $50 (beginning July 1, 2015) |
12-412 (119) |
Clothing and footwear under $300 from the third Sunday in August to the following Saturday annually |
12-407e |
U.S. and Connecticut state flags |
12-412 (23) |
Rare and antique coins, foreign currency, gold and silver bullion traded according to their value as precious metals and costing more than $1,000 |
12-412 (45) |
Caskets used for burial or cremation |
12-412 (55) (B) |
EXEMPTION |
STATUTORY CITATION |
Firearm safety devices |
12-412 (101) |
Bicycle helmets |
12-412 (102) |
Child car seats |
12-412 (108) |
College textbooks |
12-412 (109) |
Magazine subscriptions |
12-412 (114) (A) |
Newspapers |
12-412 (114) (B) |
Residential weatherization products |
12-412k |
Compact fluorescent light bulbs |
12-412k |
FOOD | |
Food products, meals, candy, confectionary, and nonalcoholic beverages sold in educational institutions and certain health and care facilities |
12-412 (9) |
Food products for human consumption |
12-412 (13) |
Meals sold through vending machines or honor boxes |
12-412 (27) |
Vending machine sales costing 50 cents or less |
12-412 (27) |
Home-delivered meals for the elderly, disabled, and homebound |
12-412 (46) |
Items purchased with Food Stamps |
12-412 (57) |
Vegetable seeds |
12-412 (96) |
BUSINESS PURCHASES | |
(1) Nonreturnable containers and returnable dairy product containers sold empty to those who put contents in them to sell together with the container, (2) containers sold with tax-exempt contents, and (3) returnable containers sold with the contents or resold for refilling |
12-412 (14) |
Materials, tools, and fuel sold to become part of items sold or used directly in (a) the fishing industry or (b) an industrial plant to make finished products for sale |
12-412 (18) |
Property used or consumed in waste treatment facilities and air pollution control facilities |
12-412 (21) & (22) |
Commodities traded on any contract market (e.g. agricultural commodities) and not converted to the purchaser's use |
12-412 (30) |
Printed material manufactured in Connecticut for out-of-state use |
12-412 (31) |
Machinery used in the manufacturing production process |
12-412 (34) |
Commercial fishing vessels and related machinery and equipment |
12-412 (40) |
Replacement parts for machinery sold to businesses located in enterprise zones |
12-412 (43) |
Filmed and taped television and radio programs that become component parts of films or tapes that will be broadcast to the public by television or radio or used for accredited medical training |
12-412 (44) (A) |
Film and video production and sound recording equipment that will become a component part of master tapes, records, or videotapes used for commercial entertainment, advertising, and educational purposes |
12-412 (44)(B) |
Equipment, including antennas, that television and radio stations use to broadcast programs |
12-412 (44) (C) |
Lease or rental of films for display by a theater owner or operator |
12-412 (50) |
EXEMPTION |
STATUTORY CITATION |
Property used by funeral homes in burials and cremations (up to $2,500 exemption per funeral) |
12-412 (55) (A) |
Items used in agricultural production by a farmer engaged in the business of farming |
12-412 (63) |
Equipment for producing or cleaning computer discs to maintain climate-controls necessary in the production and cleaning process |
12-412 (64) |
Molds, dies, patterns, and sand-handling equipment bought and sold by metal casting foundries |
12-412 (65) |
Molds, dies, and patterns sold by pattern shops to metal casting foundries or their customers for use in foundries, and items bought by pattern shops in connection with such sales |
12-412 (66) |
Commercial printing machinery, equipment, tools, materials, and supplies |
12-412 (71) |
Machinery, equipment, tools, materials, and supplies for producing typesetting, color separation, finished copy and similar products |
12-412 (72) |
Component parts for manufacturing machinery |
12-412 (73) |
Materials, tools, fuel, machinery, and equipment bought by an aircraft manufacturer that operates an aircraft manufacturing facility in the state |
12-412 (78) |
Machinery, equipment, tools, and materials used in optical lens fabrication |
12-412 (81) |
Machinery, equipment, tools, and machinery used in commercial photographic film and paper processing |
12-412 (88) |
Machinery, equipment, tools, materials, supplies, and fuel used directly in the biotechnology industry |
12-412 (89) |
Goods and services bought by a water company used to supply water to at least 50 customers |
12-412 (90) |
Safety apparel an employee wears at work |
12-412 (91) |
Items or services used to operate a Connecticut Resources Recovery Authority project |
12-412 (92) |
Items or services used to operate a solid waste-to-energy facility |
12-412 (95) |
Freight railroad machinery, equipment, and supplies |
12-412 (103) |
Calibration services for manufacturing production machinery, equipment, or instrumentation |
12-412 104 (A) |
Compliance practices and services associated with quality management and quality assurance standards created by the International Organization of Standards |
12-412 (B) |
Equipment bought by telecommunications or community antenna television companies used to provide high-speed telecommunications, high-speed data transmission, or broadband internet services |
12-412 (112) |
Materials, tools, fuel, machinery, and equipment used in a fuel cell manufacturing facility |
12-412 (113) |
Solar energy electricity generating, water or space heating systems and geothermal resource systems and related equipment and installation services |
12-412 (117) (A) |
Machinery, equipment, tools, materials, supplies, and fuel used in the renewable and clean energy technology industries |
12-412 (117) (B) |
EXEMPTION |
STATUTORY CITATION |
Ice storage cooling systems and related equipment and services related to utility customers billed on time-of-use rates |
12-412 (118) |
Materials, tools, fuels, machinery, and equipment used in manufacturing that are not otherwise eligible for a sales tax exemption (50% of the gross receipts from such items) |
12-412i |
Sales of goods and services to Connecticut credit unions (beginning July 1, 2016) |
12-412 (121) |
MOTOR VEHICLES, AIRCRAFT, AND BOATS | |
Flyable aircraft |
12-412 (20) |
Boats docked in the state for 60 days or fewer |
12-408 (1) (E) (ii); 12-411 (1) (D) (ii) |
Boats brought into the state to be stored, maintained, or repaired from October 1 through May 31 |
12-413a |
Property tax payments made under motor vehicle leases |
12-412 (49) |
Motor vehicles and boats purchased by out-of-state residents for registration outside the state |
12-412 (60) |
Commercial trucks, truck tractors, tractors, and semitrailers, and vehicles used in combination with them, that (a) have gross vehicle weight ratings over 26,000 pounds, and (b) are operated actively and exclusively to carry interstate freight for at least one year after purchase |
12-412 (70) |
Aircraft repair and replacement parts |
12-412 (76) |
Commercial motor vehicles and motor buses when, for at least one year after purchase, a minimum of 75% of their revenue comes from out-of-state or interstate trips |
12-412 (82) & (83) |
Aircraft with a maximum certificated takeoff weight of at least 6,000 pounds |
12-412 (99) |
UTILITIES | |
Gas and electricity for residential use or for direct use in (1) agricultural production, (2) making a finished product for sale, and (3) a manufacturing plant |
12-412 (3) (A) |
Water, steam, and telegraph delivered through mains, lines, pipes, or bottles |
12-412 (3) (C) |
Electricity ($150 per month) |
12-412 (3) (D) |
Gas, water, steam or electricity used in furnishing these utilities to customers through mains, lines, and pipes |
12-412 (3) (E) |
Materials, tools, and fuel used directly to furnish (1) power to a manufacturing plant or (2) gas, water, steam, and electricity to consumers through mains, lines, or pipes |
12-412 (18) |
FUEL | |
Motor vehicle fuel |
12-412 (15) |
Heating fuel for residential use or in a building where at least 75% of the fuel is for direct use in (1) agricultural production, (2) making a finished product for sale and (3) a manufacturing plant |
12-412 (16) |
Fuel used in certain high-occupancy commuter vehicles |
12-412 (37) |
Aviation fuel used exclusively and directly in experimental product testing |
12-412 (59) |
EXEMPTION |
STATUTORY CITATION |
Aviation fuel used exclusively for aviation purposes |
12-412 (75) |
Marine fuel for vessels with displacements greater than 4,000 deadweight tons or primarily engaged in interstate commerce |
12-412 (79) |
Diesel fuel used exclusively for portable generators larger than 150 kilowatts |
12-412 (107) |
MEDICAL GOODS AND AIDS FOR INDIVIDUALS WITH DISABILITIES | |
Nonprescription drugs and medicines (beginning April 1, 2015) |
12-412 (120) |
Prescription medicine, syringes, and needles |
12-412 (4) |
Medical supplies and equipment (e.g., oxygen, blood plasma, prostheses, custom-made wigs and hairpieces, hearing and vision aids) |
12-412 (19) |
Closed-circuit television equipment used as a reading aid by visually impaired people and its repair and replacement parts |
12-412 (19) (C) |
Telephone equipment designed exclusively for the deaf or blind |
12-412 (38) |
Disposable pads for incontinency |
12-412 (53) |
Diabetes testing supplies and repair and replacement parts |
12-412 (54) |
Special equipment installed in a motor vehicle for physically disabled people |
12-412 (80) |
Eligible benefits under Medicare or Medicaid or the federal Civilian Health and Medical Program of the Uniformed Services |
12-412 (87) |
Table 2: Taxable Services
SERVICE |
STATUTORY CITATION |
AGRICULTURAL | |
Landscaping and horticulture services |
12-407 (a) (37) (V) |
Pet grooming, boarding, and obedience services |
12-407 (a) (37) (KK) |
BUSINESS | |
Credit information and reporting services |
12-407 (a) (37) (B) |
Employment agencies and agencies providing personnel services |
12-407 (a) (37) (C) |
Private investigation, protection, patrol work, watchman and armored car services |
12-407 (a) (37) (D) |
Painting and lettering services |
12-407 (a) (37) (E) |
Photographic studio services |
12-407 (a) (37) (F) |
Telephone answering services |
12-407 (a) (37) (G) |
Stenographic services |
12-407 (a) (37) (H) |
Business analysis, management, management consulting, and public relations services |
12-407 (a) (37) (J) |
Piped-in music provided to business or professional establishments |
12-407 (a) (37) (K) |
Lobbying or consulting services for representing a client's interests in relation to any governmental body |
12-407 (a) (37) (R) |
Sales agent services for selling tangible personal property |
12-407 (a) (37) (S) |
Locksmith services |
12-407 (a) (37) (T) |
Advertising and public relations services, including layout, art direction, graphic design, mechanical preparation, and production supervision |
12-407 (a) (37) (U) |
Window cleaning services |
12-407 (a) (37) (W) |
Maintenance services |
12-407 (a) (37) (X) |
Janitorial services |
12-407 (a) (37) (Y) |
Exterminating services |
12-407 (a) (37) (Z) |
Business analysis, management, and managing consulting services performed by a business or its affiliate to a limited partnership where the business or affiliate (1) is compensated for the services other than through a share of partnership profits or an annual percentage of partnership capital or assets and (2) offers the services to others, including any other partnerships |
12-407 (a) (37) (DD) |
COMPUTERS AND ELECTRONICS | |
Telecommunications services |
12-407 (a) (L) |
Computer and data processing services (taxed at 1%) |
12-407 (a) (37) (A) |
Cable and satellite television services |
12-407 (a) (L) (i) |
Prepaid telephone calling services |
12-407 (a) (O) |
Video programming services provided through wireline facilities, a portion of which are located in the public right-of-way, without regard to delivery technology |
12-407 (a) (L) (ii) |
CONSTRUCTION AND REPAIR | |
Property management, repair, and renovation services to industrial, commercial and income-producing real property, including the voluntary evaluation, prevention, treatment, containment or removal of hazardous waste or air, water or soil contaminants |
12-407 (a) (37) (I) |
Radio and television repair |
12-407 (a) (37) (O) |
Furniture reupholstering and repair |
12-407 (a) (37) (P) |
Repair services to electrical or electronic devices, including air-conditioning and refrigeration equipment |
12-407 (a) (37) (Q) |
Repair or maintenance services to tangible personal property and maintenance, repair or warranty contracts |
12-407 (a) (37) (CC) |
MOTOR VEHICLES, AIRCRAFT, AND BOATS | |
Flight instruction and chartering services by a certificated air carrier |
12-407 (a) (37) (L) |
Motor vehicle repairs |
12-407 (a) (37) (M) |
Motor vehicle towing and road services |
12-407 (a) (37) (II) |
Non-metered parking in a lot with 30 or more spaces, including valet parking at airports |
12-407 (a) (37) (N) |
Intrastate transportation services provided by livery services with a driver, including limousines, community cars, and vans |
12-407 (a) (37) (FF) |
PERSONAL | |
Swimming pool cleaning and maintenance services |
12-407 (a) (37) (AA) |
Miscellaneous personal services (e.g., debt counseling, escort, porter, scalp treatment, tanning salon, and tattoo parlor services) |
12-407 (a) (37) (BB) |
Health and athletic club services |
12-407 (a) (37) (FF) |
Yoga instruction provided at a yoga studio |
12-407 (a) (37) (FF) |
Cosmetic medical procedure services |
12-407 (a) (37) (LL) |
Manicure, pedicure, and all other nail services, regardless of where performed |
12-407 (a) (37) (MM) |
Spa services, regardless of where performed |
12-407 (a) (37) (NN) |
STORAGE | |
Motor vehicle storage, including motor homes, campers, and camp trailers |
12-407 (a) (37) (GG) |
Storage or mooring of any noncommercial vessel on land or in the water |
12-407 (a) (M) |
Storage of personal property by a person in the business of furnishing such space |
12-407 (a) (P) |
Packing and crating services |
12-407 (a) (37) (HH) |
Table 3: Service Exemptions
SERVICE |
STATUTORY CITATION |
AGRICULTURAL | |
Landscaping, horticulture, window cleaning or maintenance services for people receiving Social Security total disability benefits |
12-412 (85) |
Pet grooming and boarding services provided as an integral part of professional veterinary services |
12-407 (a) (37) (KK) |
BUSINESS | |
Professional, insurance, and personal service transactions involving sales as inconsequential elements for which no separate charges are made |
12-412 (11) |
Personnel, management, and research services when both the seller and the recipient are participating in a joint venture for research and new product development |
12-412 (58) |
Services between parent companies and wholly-owned subsidiaries |
12-412 (62) |
Services used to develop, build, rehabilitate, renovate, or repair low- and moderate-income housing located in designated areas and allocated certain federal tax credits |
12-412 (100) |
“Call before you dig” services |
12-412 (106) |
Boat brokerage services |
12-412 (116) |
Private investigation, protection, patrol work, watchman, and armored car services performed by off-duty police officers and firefighters |
12-407 (a) (37) (D) (i) |
Coin and currency protection, patrol, and armored services provided by one financial services company to another |
12-407 (a) (37) (D) (ii) |
Website creation, development hosting, and maintenance |
12-407 (a) (37) (A) |
Environmental consulting services to businesses |
12-407 (a) (37) (J) (i) |
Training services provided by colleges and universities licensed and accredited by the Board of Governors of Higher Education |
12-407 (a) (37) (J) (ii) |
Business analysis, management, consulting, and public relations services rendered in connection with an aircraft that (a) is leased or owned by a certified commercial air carrier or (b) has a maximum certificated take-off weight of at least 6,000 pounds |
12-407 (a) (37) (J) (iii) |
Consignment services for someone selling (1) works of art or (2) clothing and footwear |
12-407 (a) (37) (S) |
Advertising services related to the development of media or cooperative direct mail advertising |
12-407 (a) (37) (U) |
Services by one affiliate to another when participating in a community economic development program established under § 8-240k |
12-412 (86) |
COMPUTER AND ELECTRONICS | |
Internet access services |
12-408 (1) (D) (ii); 12-411 (1) (E) (ii) |
Certain computer and data processing services rendered under certain specified circumstances and during specified time periods |
12-412 (74) |
CONSTRUCTION AND REPAIR | |
Property management, electrical, plumbing, painting and other maintenance services to (a) owner-occupied residential property containing up to 3 dwelling units and (2) housing facilities for low- and moderate-income families operated by a nonprofit housing organization |
12-407 (a) (37) (I) |
MEDICAL | |
Services used to determine the probable health consequences of consuming or using a product or substance |
12-412 (41) |
Reconstructive surgery |
12-407 (a) (37) (LL) |
Patient care services |
12-408 (1) (F); 12-411 (1) (F) |
MOTOR VEHICLES, AIRCRAFT, AND BOATS | |
Motor vehicle driving services performed out-of-state |
12-412 (36) |
Aircraft repair services |
12-412 (77) |
Metered parking |
12-407 (a) (37) (N) |
Non-metered parking in seasonal lots with 30 or more spaces provided by a (1) federal, state, or municipal entity; (2) nonprofit charitable hospital, nursing home, rest home, residential care home, or certain acute-care for-profit hospitals; or (3) nonprofit organization exempt from federal income tax |
12-407 (a) (37) (N) (i) |
Non-metered motor vehicle parking in an employer-operated lot owned or leased for a minimum of 10 years and operated for the exclusive use of its employees |
12-407 (a) (37) (N) (ii) |
Space in state-owned or operated and municipally-operated railroad parking facilities located in areas not meeting federal Clean Air standards for ozone |
12-407 (a) (37) (N) (iii) |
Boat repair and maintenance services |
12-408 (1) (E) (i); 12-411 (1) (D) (i) |
SERVICE |
STATUTORY CITATION |
Dry or wet storage or mooring of a boat from October 1 through May 31 |
12-407 (2) (M) |
Intrastate transportation by taxicab, motor bus, ambulance, scheduled public transportation, Medicaid nonemergency medical transportation, paratransit services provided under an agreement with the state or any political subdivision, dial-a-ride services, and services provided in connection with funerals |
12-407 (a) (37) (JJ) |
PERSONAL | |
Massage services by a licensed massage therapist |
12-407 (a) (37) (BB) (i) |
Electrology services by a licensed electrologist |
12-407 (a) (37) (BB) (ii) |
Health and athletic club services included in fees subject to dues tax |
12-407 (a) (37) (FF) (i) |
Health and athletic club services provided by a municipality or nonprofit organization |
12-407 (a) (37) (FF) (ii) |
Shoe repair |
12-412 (105) |
RP:jk