Location:
TAX EXEMPTIONS; TAXES - INCOME; TAXES - SALES;
Scope:
Connecticut laws/regulations;

OLR Research Report


August 3, 2011

 

2011-R-0276

SALES AND USE TAX EXEMPTIONS

By: Rute Pinho, Associate Analyst

You asked for a list of goods and services exempt from the state sales and use tax.

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, boats, jewelry, clothing, and footwear;

2. 4.5% on motor vehicles purchased by an active duty U.S. military member 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 certain acute care, for-profit hospitals

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 the 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 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)

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 (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, televisions 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)

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)

Ice storage cooling systems and related equipment and services related to utility customer billed on time-of-use rates

12-412 (118)

Materials, tools, fuels, machinery, and equipment used in manufacturing that is not otherwise eligible for a sales tax exemption (50% of the gross receipts from such items)

12-412i

MOTOR VEHICLES, AIRCRAFT, AND BOATS

 

Flyable aircraft

12-412 (20)

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)

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 THE DISABLED

 

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-captioned television equipment used as a reading aid by visually impaired people and it 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 cooperate 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) (C) (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) (E); 12-411 (1) (E)

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-acre 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) (D); 12-411 (1) (C)

Dry or wet storage or mooring of a boat from November 1 through April 30

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 municipally or nonprofit organization

12-407 (a) (37) (FF) (ii)

Shoe repair

12-412 (105)

RP:ro