On June 23, Governor Lamont signed the Connecticut State Budget Act. The budget does not include changes to income or sales tax rates, but does include several other tax-related increases, cuts, and reliefs, including the following:
- The 10% corporation tax surcharge payable to companies with gross annual income of $ 100 million or more will be extended by two years to tax years 2021 and 2022. The surcharge should expire after the 2020 tax year.
- The exit from capital taxation will be extended to the tax year 2027, with the exit starting with the tax year 2024. The exit should be completed by the tax year 2024.
- The Department of Revenue Services is directed to establish a tax amnesty program that runs from November 1, 2021 through January 3, 2022 and applies to all tax periods up to or before December 30, 2020. Taxpayers who qualify for the program are required to file tax returns and pay all taxes owed, but benefit from a 75 percent reduction in applicable interest rates and the elimination of any other penalties. Taxpayers approved for the program must waive all legal remedies and any right to have any credit or refund of taxes covered by the application waived. The program does not apply to taxpayers who are party to a final agreement, have accepted a compromise offer, are a party to a managed audit agreement, or are the subject of pending criminal investigations or proceedings.
- Certain companies that sell meals (e.g. restaurants, hotels, and bars) are allowed to pay sales tax on food and beverages during one of three weeks selected by the Eligible Company (August 1-7, 2021, December 12-18, 2021) , 2021 or May 15-21, 2022).
- The entry tax will be waived from July 1, 2021 for all amusement, entertainment or recreation places except cinemas.
- The research and development credit companies will be able to claim their annual Connecticut tax liability, increasing over a period of two years from currently 50.01% to 60% for tax year 2022 and 70% for tax year 2023 and subsequent tax years. However, the carryforward period for unused credits is reduced from an indefinite one to 15 years, starting with R&D credits earned in tax year 2021 and beyond.
- From July 1, 2023, the excise tax on beer will be reduced.
- Income tax on income from IRAs (excluding Roth IRAs) for qualifying income taxpayers will be phased out between tax years 2023 and 2026.