While the new $43 billion state budget that was adopted last month claimed to not increase the sales or income tax, a number of “changes” were made that will have an effect on CEMA members. Below is a summary of the new expanded application of the sales tax and some increases (and a decrease) that may impact you and your business.
General Business
- Pass-through entity tax – Reduces a tax credit available to partnerships and small corporations known as “pass-through companies” where profits pass to their owners rather than pay corporate taxes to 87.5%. In a tax cut, the $250 “business entity tax” paid by all companies every other year is ended, saving businesses about $25 million a year.
- LLC/LLP filing fee – The annual report filing fee to the Secretary of State for LLC’s and LLP’s will increase from $20 to $80 in July of 2020
- Business entity tax – The $250 biennial business entity tax is eliminated
Fuel
- Diesel fuel – The Connecticut Diesel Tax will increase by 2.6cpg from 43.9cpg to 46.5cpg on July 1, 2019.
- Marine diesel – Reduces the rate from 6.35% to 2.99% that applies to dyed diesel fuel that is sold by a marine fuel dock exclusively for marine purposes or stored, accepted, or otherwise used for those purposes on October 1, 2019.
C-Stores
- Meal and beverage tax – Prepared foods sold in ready-to-eat form or wrapped as “take-out” or “to-go” and soda and soft drinks dispensed from a fountain will be subject to 7.35% tax effective October 1, 2019.
- Single use bag fee – A surcharge of 10 cents on disposable plastic bags will bring in $27.7 million in the first year and $26.8 million in the second year. An outright ban will go into effect in two years. Connecticut residents have until July 1, 2021 to convert to using reusable shopping bags before plastic bags are banned under legislation passed this session. In the meantime, consumers will pay 10 cents for each single-use plastic bag starting August 1.
- E-cigarette/Vape tax – A 40 cents per milliliter tax on electronic nicotine delivery systems, liquid nicotine containers, vapor products, and liquids that, when used in an electronic nicotine delivery system, produce a vapor that includes nicotine and is inhaled by the system’s user and 10% of the wholesale price for all other e-cigarette products.
- Tobacco sale age – The legal age to purchase tobacco products in Connecticut will go from 18 to 21 on October 1, 2019. Businesses violating the law can be fined up to $300 and subsequent offenses can reach up to $1,000.
- Minimum wage – The $10.10 minimum wage will rise to $15 over four-and-a-half years – $11 on October 1, 2019, $12 on September 1, 2020, $13 on August 1, 2021, $14 on July 1, 2022 and $15 on October 15, 2023. After 2023, the minimum wage would be pegged to the Employment Cost Index, a wage growth index calculated by the federal Bureau of Labor Statistics.
