Here’s how new taxes will set you back
With a budget deal headed to his desk for a signature, Gov. Ned Lamont is quick to point out that it won’t increase income or sales tax rates, or reduce aid to cities and towns.
But a series of tax increases and expansions in other areas, as well as postponed tax cuts and credits, total about $340 million. Here’s where you’ll notice those increases:
The sales tax on digital downloads — things like e-books and movies downloaded from Amazon — will increase from 1 percent to 6.35 percent, bringing in $27.5 million in the first year and $37.1 million in the second.
Prepared foods such as restaurant meals will be subject to a 1 percent tax, generating $48.3 million for the state in the first year of the biennial budget and $65.8 million in the second year.
The sales tax will be expanded to
include parking, dry-cleaning and laundry services, and interior design services. That’s far less than Lamont had hoped for. He’d originally proposed expanding the sales tax to all services. The sales tax expansion will generate an additional $11.8 million in the first year and $24.4 million in the second year.
The budget will also lower the threshold to collect online retail sales tax — out-of-state sellers are considered a retailer for Connecticut sales and use tax purposes after 200 or more retail sales and $250,000 in gross receipts in a 12-month period. The change lowers the threshold in gross receipts to $100,000. The change is expected to grow online sales tax receipts by $1.5 million in the first year and $2 million in the second.
A mandated occupancy tax on short-term rentals operated through online platforms such as Airbnb is expected to generate $1.5 million in the first year and $2 million in the second year of the budget.
In 2020, homeowners moving out of state and selling their house for more than $2.5 million will pay a new mansion tax, which increases the conveyance rate to 2.25 percent on those real estate sales. The change will generate $6.3 million in the second year of the budget.
The budget cancels a plan to eliminate the corporate surcharge tax, which will generate $60 million in the first year and $37.5 million in the second.
The annual filing fee for LLCs and LLPs will increase in 2020, bringing in an additional $12 million to the state.
A tax on E-cigarette liquid at wholesale will generate $1.9 million in the first year and $2.5 million in the second.
The excise tax on alcohol will increase, bringing in an additional $3.8 million in the first year and $5 million in the second year.
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.
The fee for ride-sharing services like Uber and Lyft will increase from 25 cents to 30 cents per ride, generating $4.5 million in the first year and $4.6 million in the second year.
The vehicle trade-in fee will increase, bringing in $7.4 million in the first year and $9.8 million in the second.
Repealing an income tax credit for STEM graduates will bring in $3.9 million in the first year and $7.0 million in the second year.