At a glance
- Corporate tax
- 7.5% (+10% surtax for some)
- Tax on wages
- Graduated
- Sales tax
- 6.35%; SaaS to businesses 1%
- Economic nexus
- $100,000 and 200 sales
- Minimum wage
- $16.94/hr
- UI wage base
- $27,000
- New-employer UI rate
- 1.9%
- Paid leave program
- CT Paid Leave 0.5% (to SS wage base)
- Annual report
- $435, in the anniversary month
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Register the corporation
Before doing business in ConnecticutFile an Application for Certificate of Authority at Business.CT.gov ($385, including a $285 license fee).
Open DRS tax accounts
Before the first Connecticut payroll or taxable saleRegister with DRS on myconneCT for withholding, and for sales and use tax (or business use tax) if needed.
Register for unemployment insurance
Before the first payrollRegister with the Department of Labor in ReEmployCT for unemployment insurance; the new-employer rate is 1.9% on $27,000.
Set up CT Paid Leave
With the first Connecticut employeeRegister with the CT Paid Leave Authority and start deducting 0.5% of wages, or put an approved private plan in place.
Report new hires
Within 20 days of hireReport each new employee to the state’s new-hire registry.
Insurance, paydays and leave
Before the first hireCarry workers’ compensation insurance, set a weekly payday, post required notices, and set up sick-leave accrual if you have 11+ employees (1+ from 2027).
Decide on sales tax
Each year, on the 12 months ending Sept 30Watch the $100,000 and 200-sale tests; SaaS sold to businesses is taxable at 1%.
The six areas
- AccountingAccounting and state tax in ConnecticutConnecticut taxes corporations at 7.5% of apportioned income, with a 10% surtax that reaches every combined group, a $250 minimum and an NOL cap at half of income.Corporation business tax rate7.5%
- ReceivablesReceivables and sales tax in ConnecticutConnecticut charges 6.35% with no local rates, but SaaS and software sold to businesses are 1%. Remote sellers register at $100,000 and 200 sales in a year.Sales tax rate6.35%
- PayablesPayables and contractors in ConnecticutConnecticut wants its own copy of every 1099-NEC for Connecticut work by January 31. Software bought for business use owes 1% use tax when the vendor doesn’t charge it.State 1099-NEC filingRequired, Jan 31
- PayrollPayroll taxes and employer rules in ConnecticutConnecticut payroll means a $27,000 wage base, CT Paid Leave at 0.5% from the first employee, weekly paydays by default, and paid sick leave reaching every employer in 2027.SUI wage base$27,000
- ComplianceCompliance and filings in ConnecticutRegistering costs $385 and the annual report $435 a year, due in the anniversary month. The corporate return is due May 15, with heavy estimates from the third month.Certificate of Authority$385
- AdvisoryAdvisory: credits and decisions in ConnecticutConnecticut lets small companies exchange unused R&D credits for 65% of their value in cash, and offers angel investors a 25% credit. The surtax and NOL cap catch forecasts.R&D credit exchange65% of the credit, in cash
Who you register with
- Connecticut Department of Revenue Services (DRS)Corporation business tax, sales and use tax, withholding, 1099 filing (myconneCT)
- Connecticut Department of LaborUnemployment insurance (ReEmployCT), wage-and-hour, paid sick leave
- CT Paid Leave AuthorityPaid family and medical leave contributions
- Connecticut Secretary of the State, Business ServicesCertificate of Authority and annual reports (Business.CT.gov)
- Office of the Treasurer, Unclaimed PropertyUnclaimed property holder reports
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Connecticut’s neighbors.
Common questions
Is the 10% surtax only for big companies?
Often, yes. Connecticut’s DRS says the 10% surtax applies to companies with $100 million or more of gross income or that file as part of a combined unitary group. A parent and operating subsidiary filing Form CT-1120CU are a combined group, so the surtax can reach a startup long before $100 million of revenue.
Is SaaS taxable in Connecticut?
Yes, at a reduced rate when it is sold to a business. Connecticut taxes computer and data processing services, and canned software electronically accessed by a business for business use, at 1%. The same software bought by a consumer for personal use is taxed at 6.35%. A B2B SaaS company charges 1%; a consumer app charges 6.35%.
Do we file 1099s with Connecticut if we filed them with the IRS?
Yes. DRS requires the state copy of Form 1099-NEC for payments to Connecticut residents, and to nonresidents for services performed wholly or partly in Connecticut, even if no Connecticut tax was withheld. It is due January 31 with Form CT-1096, and you must file electronically once you have 25 or more forms.
Can we run payroll semi-monthly in Connecticut?
Weekly is the default. Connecticut law requires employers to pay all wages due weekly on a regular payday designated in advance; paying less often generally needs approval from the Labor Commissioner. Most payroll providers will ask, but the default setting in many is semi-monthly.
What does it cost to keep a Delaware corporation registered in Connecticut?
A foreign stock corporation pays $385 to register (a Certificate of Authority, including a $285 license fee) and $435 a year for its annual report, which is due by the last day of the anniversary month of its registration. Combined with Delaware’s franchise tax, Connecticut is one of the more expensive states to stay registered in.
Can a loss-making startup turn Connecticut R&D credits into cash?
Yes, if it qualifies as a small business. A company with prior-year gross income of $70 million or less that cannot use its research and development credits can exchange them with the state for 65% of their value, as a refund. Qualifying biotechnology companies can exchange at 90% from 2025.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Connecticut DRS — Corporation Business Tax information
- Connecticut DRS — 2026 state tax developments
- Connecticut DRS — IP 2010(29.1), Q&A on economic nexus
- Connecticut DRS — Sales and use tax information
- Connecticut DRS — Sales and use taxes, nexus
- Connecticut DRS — Registering your business with DRS
- Connecticut DRS — Form 1099 and W-2G filing requirements
- Connecticut DRS — Withholding tax information
- Connecticut DOL — Unemployment tax rate for calendar year 2026
- Connecticut DOL — Tax rates and taxable wage base
- CT Paid Leave Authority — Contributions
- Connecticut DOL — Wage and hour, minimum wage
- Office of the Governor — Minimum wage increases to $16.94 on January 1, 2026
- Connecticut DOL — Paid sick leave FAQs
- Connecticut DOL — Wage payment laws
- Business.CT.gov — Foreign stock corporations forms and fees
- Business.CT.gov — Annual report due date
- Connecticut DRS — Research and Development (nonincremental) Expenses Tax Credit
- Connecticut Innovations — Angel Investor Tax Credit Program
- Office of the Treasurer — Unclaimed property holder information
- IRS Publication 1220 — Combined Federal/State Filing participating states
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.