Free guide for contractors
Do contractors charge sales tax in Connecticut?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
CT Connecticut
Depends on the jobIt depends on the property. Labor on existing commercial or rental property is taxed; new construction and owner-occupied homes are not.
Connecticut generally taxes services to existing industrial, commercial and income-producing property, unless the purchaser is exempt. Rented homes count as income-producing.
A contractor's labor is not taxed on new construction or on owner-occupied residential property. Owner-occupied means a building of one to three units, used only as a residence, where the owner lives.
On a taxable job, the Department's guide shows two ways to bill: list materials and labor separately and tax the labor, or state that sales tax is included on services. In its example, $600 of labor carries $38.10 of tax and $400 of materials carries none.
It turns on: whether the property is new construction, owner-occupied residential, or commercial or income-producing; what service is performed; whether the customer is exempt.
Watch out for
- Some services are taxable on all real property, whatever its type: landscaping, janitorial, maintenance, snow removal, exterminating, house washing, pool cleaning and locksmith services (IP 2018(2), p.13).
- Repair of tangible personal property, such as units and appliances, is taxed on the total bill (IP 2018(2), p.11).
- On a lump-sum contract for a taxable service, tax is on the stated contract price, so materials have to be broken out to leave them out (IP 2018(2), p.9).
“Services to existing industrial, commercial, and income-producing property are generally taxable, unless the purchaser is exempt”CT DRS, IP 2018(2)