-
Overall Rank
46
Up 1 place since 2026 -
30
Up 1 place since 2026 -
45
Up 1 place since 2026 -
20
Up 1 place since 2026 -
49
Up 1 place since 2026 -
Unemployment Insurance Tax Rank
38
Up 1 place since 2026
Connecticut ranks 46th overall on the 2027 State Tax Competitiveness Index.
Score 4.28 / 10
About Connecticut's Tax Code
Connecticut’s tax code includes all major tax types, and the state has historically ranked among the bottom 10 on the Index. Connecticut has one of the most complex and least neutral individual income tax systems in the nation, featuring seven tax brackets with a top marginal rate of 6.99 percent and a recapture provision that eliminates the benefit of lower brackets, effectively taxing all income at the taxpayer’s highest marginal rate. Additionally, tax brackets and the personal exemption are not adjusted for inflation.
Connecticut’s baseline corporate income tax rate is high at 7.5 percent, though still lower than in other New England states, such as Massachusetts and Vermont. However, the state imposes a 10 percent surtax on businesses with gross proceeds of $100 million or more, or those filing as part of a combined unitary group, which increases the total tax burden for large corporations. The state does not comply with federal bonus depreciation treatment, requiring businesses to add back any first-year expensing of capital investment taken at the federal level. A minimum tax is also imposed on corporations’ capital stock. This provision was once slated for expiration, but the phaseout now extends until 2028, with the current rate at 0.16 percent. Connecticut does, however, forgo a harmful throwback rule and offers a 30-year net operating loss carryforward, although it caps NOLs at 50 percent in a given year.
The state’s sales tax rate of 6.35 percent is competitive both nationally and regionally, but the base includes some business inputs and excludes many final consumption goods and services, which limits the revenue-generating potential and reduces the neutrality of the sales tax system.
Connecticut also has one of the highest property tax burdens in the nation (relative to personal income) and imposes harmful estate and gift taxes, making the state less attractive to homeowners and high-net-worth individuals.
Component Scores
#46 overall · 4.28 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #30 | 5.01 / 10 | |
| Individual Income Taxes | #45 | 3.82 / 10 | |
| Sales Taxes | #20 | 5.02 / 10 | |
| Property Taxes | #49 | 2.97 / 10 | |
| Unemployment Insurance Taxes | #38 | 4.48 / 10 |
Ranking Changes, 2020–2027
#46 in 2027 · up 1 place from 2020Connecticut ranked 47th in 2020 and ranks 46th in 2027, an improvement of 1 place. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 47 (4.20) | 25 (5.17) | 47 (3.74) | 26 (4.81) | 50 (2.69) | 38 (4.45) |
| 2021 | 47 (4.23) | 24 (5.18) | 46 (3.79) | 24 (4.79) | 50 (2.76) | 39 (4.41) |
| 2022 | 47 (4.31) | 27 (5.18) | 46 (3.82) | 21 (4.94) | 50 (2.75) | 33 (4.70) |
| 2023 | 47 (4.28) | 29 (5.15) | 47 (3.79) | 19 (5.00) | 50 (2.61) | 35 (4.69) |
| 2024 | 47 (4.26) | 31 (5.05) | 47 (3.73) | 19 (5.01) | 50 (2.65) | 30 (4.82) |
| 2025 | 47 (4.20) | 31 (5.03) | 47 (3.69) | 19 (5.02) | 50 (2.65) | 39 (4.51) |
| 2026 | 47 (4.23) | 31 (5.02) | 46 (3.72) | 21 (4.99) | 50 (2.78) | 39 (4.50) |
| 2027 | 46 (4.28) | 30 (5.01) | 45 (3.82) | 20 (5.02) | 49 (2.97) | 38 (4.48) |
Connecticut Compared across the States
#46 overallEach row places the states on a 0 to 10 score scale for one measure. Connecticut is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#46 4.28
Corporate Taxes
#30 5.01
Individual Income Taxes
#45 3.82
Sales Taxes
#20 5.02
Property Taxes
#49 2.97
Unemployment Insurance Taxes
#38 4.48
- Connecticut
- Other states, by rank (1st to 50th)
- 50-state median
Connecticut and Its Neighbors
#46 overallConnecticut borders 3 states and ranks 46th overall; 2 of them rank higher and 1 ranks lower.
-
Rhode Island #39 Score 4.62 7 places better -
Massachusetts #45 Score 4.34 1 place better -
Connecticut #46 Score 4.28 This state -
New York #50 Score 3.66 4 places behind
What Each Component Includes
The five components of the Index, what each one covers, and where Connecticut lands. Open any component for the full breakdown.
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Corporate Taxes
Rank #30Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Connecticut → -
Individual Income Taxes
Rank #45Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Connecticut → -
Sales Taxes
Rank #20Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Connecticut → -
Property Taxes
Rank #49Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Connecticut → -
Unemployment Insurance Taxes
Rank #38Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Connecticut →
Tax Data Explorer
Every policy variable behind Connecticut's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
153 data points · Shaded values differ from Connecticut
Corporate Taxes: Corporate Income Tax Rates
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Bracket 1 | 7.5% > $0 | 8.0% > $0 (differs) | 6.5% > $0 (differs) | 7.0% > $0 (differs) |
| Bracket 2 | 8.25% > $100,000,000 | n.a. (differs) | 7.25% > $5,000,000 (differs) | n.a. (differs) |
| Gross Receipts Tax | No | No | No | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Job Credits | Yes | Yes | Yes | Yes |
| Research and Development Credits | Yes | Yes | Yes | Yes |
| Investment Credits | Yes | Yes | Yes | Yes |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Conforms to Federal NOL Treatment | No | No | No | No |
| Carryback (Years) | 0 | 0 | 3 (differs) | 0 |
| Carryback Cap | $0 | $0 | Unlimited (differs) | $0 |
| Carryforward (Years) | 30 | 20 (differs) | 20 (differs) | 20 (differs) |
| Carryforward Cap | 50% | Unlimited (differs) | Unlimited (differs) | 80% (differs) |
Corporate Taxes: Treatment of Capital Investment
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 0% | 0% |
| Conforms to Section 163(j) Limitation | No | Yes (differs) | Yes (differs) | Yes (differs) |
| GILTI Inclusion | 5% Inclusion | 5% Inclusion | 5% Inclusion | 50% Inclusion (differs) |
| Section 174 Expensing | Yes | Yes | No (differs) | No (differs) |
| Section 168(n) Expensing | No | No | No | No |
Corporate Taxes: Other Corporate Base Variables
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes |
| Conformity Status | Rolling | Rolling | Rolling | Rolling |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Yes | Yes |
| Throwback Rule | No | Yes (differs) | No | Yes (differs) |
| Foreign Tax Deductibility | Yes | No (differs) | Yes | Yes |
| Corporate AMT | No | No | No | No |
| Brackets Indexed for Inflation | No | Flat CIT (differs) | No | Flat CIT (differs) |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Bracket 1 | 2.0% > $0 | 5.0% > $0 (differs) | 3.9% > $0 (differs) | 3.75% > $0 (differs) |
| Bracket 2 | 4.5% > $10,000 | 9.0% > $1,107,750 (differs) | 4.4% > $8,500 (differs) | 4.75% > $82,050 (differs) |
| Bracket 3 | 5.5% > $50,000 | n.a. (differs) | 5.15% > $11,700 (differs) | 5.99% > $186,450 (differs) |
| Bracket 4 | 6.0% > $100,000 | n.a. (differs) | 5.4% > $13,900 (differs) | n.a. (differs) |
| Bracket 5 | 6.5% > $200,000 | n.a. (differs) | 5.9% > $80,650 (differs) | n.a. (differs) |
| Bracket 6 | 6.9% > $250,000 | n.a. (differs) | 6.85% > $215,400 (differs) | n.a. (differs) |
| Bracket 7 | 6.99% > $500,000 | n.a. (differs) | 9.65% > $1,077,550 (differs) | n.a. (differs) |
| Bracket 8 | n.a. | n.a. | 10.3% > $5,000,000 (differs) | n.a. |
| Bracket 9 | n.a. | n.a. | 10.9% > $25,000,000 (differs) | n.a. |
| Standard Deduction (Single Filer) | n.a. | n.a. | $8,000 (differs) | $11,200 (differs) |
| Personal Exemption (Single Filer) | $15,000 | $4,400 (differs) | n.a. (differs) | $5,250 (differs) |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | n.a. | $1,000 (differs) | $1,000 (differs) | $5,250 (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | None | 1.94% (differs) | None |
| Surtaxes on Wage Income | n.a. | 0.88% (differs) | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Marriage Penalty | No | No | Yes (differs) | Yes (differs) |
| Married Couples Can File Separately on One Return | No | No | No | No |
| Convenience Rule | Partial | No (differs) | Yes (differs) | No (differs) |
| Interest Taxed | Yes | Yes | Yes | Yes |
| Dividends Taxed | Yes | Yes | Yes | Yes |
| Capital Gains Taxed | Yes | Yes | Yes | Yes |
| Combined Capital Gains Tax Rate | 6.99% | 9% (differs) | 12.838% (differs) | 5.99% (differs) |
| Tax Brackets Indexed for Inflation | No | Yes (differs) | No | Yes (differs) |
| Standard Deduction Indexed for Inflation | Yes | Yes | No (differs) | Yes |
| Personal Exemption Indexed for Inflation | No | No | No | Yes (differs) |
| Progressivity Ratio | 1.55 | 1.80 (differs) | 2.02 (differs) | 1.60 (differs) |
Individual Income Taxes: Other Individual Base Variables
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes |
| Conformity Status | Rolling | Static (not current) (differs) | Rolling | Rolling |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes | Yes |
| AMT Levied | Yes | No (differs) | No (differs) | No (differs) |
| Recognition of S Corporation Status | Yes | Yes | Partial (differs) | Yes |
| Section 179 Expensing Limit | $512,000 | $1,250,000 (differs) | $2,560,000 (differs) | $2,560,000 (differs) |
| Tips | Taxable | Taxable | Exempt (differs) | Taxable |
| Overtime | Taxable | Taxable | Taxable | Taxable |
| Filing and Withholding Threshold Index | 5 | 0 (differs) | 2.333 (differs) | 0 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Income Recapture | Yes | No (differs) | Yes | No (differs) |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| State Sales Tax Rate | 6.35% | 6.25% (differs) | 4.00% (differs) | 7.00% (differs) |
| Average Local Sales Tax Rate | 0.00% | 0.00% | 4.54% (differs) | 0.00% |
| Maximum Local Sales Tax Rate | None | None | 4.875% (differs) | None |
| Gasoline Tax (Cents per Gallon) | 25.00 | 27.56 (differs) | 24.18 (differs) | 41.12 (differs) |
| Diesel Tax (Cents per Gallon) | 49.9 | 27.56 (differs) | 22.38 (differs) | 41.12 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $4.35 | $3.51 (differs) | $5.35 (differs) | $4.50 (differs) |
| Beer Tax (Dollars per Gallon) | $0.1935 | $0.1065 (differs) | $0.14 (differs) | $0.1242 (differs) |
| Spirits Tax (Dollars per Gallon) | $5.94 | $4.05 (differs) | $6.44 (differs) | $5.40 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 40.00% | 196.25% (differs) | 71.435% (differs) | 50.00% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Exempt | Exempt | Exempt | Exempt |
| Office Equipment | Taxable | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Exempt | Exempt | Exempt | Exempt |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | Exempt | Exempt |
| Business Leases and Rentals | Taxable | Taxable | Taxable | Taxable |
| Information Services | Taxable | Exempt (differs) | Taxable | Exempt (differs) |
| Software as a Service (SaaS) | Partial | Taxable (differs) | Taxable (differs) | Taxable (differs) |
| Platform as a Service (PaaS) | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) |
| Digital B2B Products | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Payroll Services | Exempt | Exempt | Exempt | Exempt |
| Data Center Purchases | Exempt | Exempt | Exempt | Taxable (differs) |
| Digital Advertising Tax | No | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Groceries | Exempt | Exempt | Exempt | Exempt |
| Clothing | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Prescription Medication | Exempt | Exempt | Exempt | Exempt |
| Nonprescription Medication | Exempt | Taxable (differs) | Exempt | Taxable (differs) |
| Gasoline | Exempt | Exempt | Taxable (differs) | Exempt |
| Landscaping | Taxable | Exempt (differs) | Taxable | Exempt (differs) |
| Repair Services | Taxable | Exempt (differs) | Taxable | Exempt (differs) |
| Real Estate Services | Exempt | Exempt | Exempt | Exempt |
| Parking | Taxable | Exempt (differs) | Taxable | Exempt (differs) |
| Dry Cleaning | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Fitness Services | Taxable | Exempt (differs) | Exempt (differs) | Exempt (differs) |
| Barber Services | Exempt | Exempt | Exempt | Exempt |
| Veterinary Services | Exempt | Exempt | Exempt | Exempt |
| E-Books | Taxable | Exempt (differs) | Exempt (differs) | Taxable |
| Streaming Video | Taxable | Exempt (differs) | Exempt (differs) | Taxable |
| Medical Services | Exempt | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt | Exempt |
| Sales Tax Holiday | Yes | Yes | No (differs) | No (differs) |
Sales Taxes: Sales Tax Structure
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Gross Sales Threshold | Gross Sales Threshold | Gross Sales Threshold | Sales or Transactions Threshold (differs) |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Property Tax Collections per Capita | $3,422 | $3,215 (differs) | $3,538 (differs) | $2,530 (differs) |
| Property Tax as a Percentage of Personal Income | 3.60% | 3.44% (differs) | 4.16% (differs) | 3.58% (differs) |
| Assessment Limit | Yes | No (differs) | Yes | No (differs) |
| Levy Limit | No | Yes (differs) | Yes (differs) | Yes (differs) |
| Capital Stock Tax Rate | 0.16% | 0.26% (differs) | 0.1875% (differs) | None (differs) |
| Capital Stock Tax Maximum Payment | $1,000,000 | Unlimited (differs) | $5,000,000 (differs) | n.a. (differs) |
| Payment Options for Capital Stock and Corporate Income Taxes | Pay highest | Pay both (differs) | Pay highest | n.a. (differs) |
Property Taxes: Property Tax Bases
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | No (differs) | Yes |
| Tangible Personal Property De Minimis Exemption | None | None | n.a. (differs) | $50,000 (differs) |
| Intangible Property Tax | No | No | No | No |
| Inventory Tax | No | Partial (differs) | No | No |
| Real Estate Transfer Tax | Yes | Yes | Yes | Yes |
| Split Roll | Yes | Yes | Yes | Yes |
| Split Roll Ratio | 1.90 | 2.17 (differs) | 7.50 (differs) | 3.48 (differs) |
| Estate Tax | 12% | 16% (differs) | 16% (differs) | 16% (differs) |
| Inheritance Tax | No | No | No | No |
| Gift Tax | Yes | No (differs) | No (differs) | No (differs) |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Minimum Rate | 1.10% | 1.17% (differs) | 2.03% (differs) | 1.10% |
| Maximum Rate | 9.90% | 17.14% (differs) | 9.83% (differs) | 9.70% (differs) |
| Taxable Wage Base | $27,000 | $15,000 (differs) | $17,600 (differs) | $30,800 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.50% | 0.56% (differs) | 0.00% (differs) | 0.21% (differs) |
| Most Favorable Schedule: Maximum Rate | 5.40% | 8.62% (differs) | 5.90% (differs) | 7.40% (differs) |
| Least Favorable Schedule: Minimum Rate | 0.50% | 1.21% (differs) | 1.50% (differs) | 1.20% (differs) |
| Least Favorable Schedule: Maximum Rate | 5.40% | 18.55% (differs) | 8.90% (differs) | 10.00% (differs) |
| Employer Contributions as a Share of Total Wages | 0.53% | 0.43% (differs) | 0.48% (differs) | 0.97% (differs) |
| Employer Contributions as a Share of Taxable Wages | 1.91% | 2.06% (differs) | 3.08% (differs) | 2.22% (differs) |
| Trust Fund Solvency Ratio | 0.08 | 0.25 (differs) | 0.06 (differs) | 0.9 (differs) |
| New Employer Rate | 1.90% | 2.13% (differs) | 3.40% (differs) | 1.21% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Experience Formula Based On | Benefits Ratio | Reserve Ratio (differs) | Reserve Ratio (differs) | Reserve Ratio (differs) |
| Benefits Charged in Proportion to Base-Period Wages | Yes | No (base-period employers in inverse chronological order) (differs) | Yes | No (most recent or principal employer) (differs) |
| Charged If Employee's Benefit Award Is Reversed | No | No | No | No |
| Charged for Reimbursements on Combined Wage Claims | No | Yes (differs) | Yes (differs) | No |
| Charged If Employee Left Voluntarily | No | Yes (differs) | No | No |
| Charged If Employee Was Discharged for Misconduct | No | Yes (differs) | No | No |
| Charged If Employee Refused Suitable Work | No | Yes (differs) | Yes (differs) | No |
| Charged If Employee Continues to Work Part-Time | No | No | No | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Connecticut | Massachusetts | New York | Rhode Island |
|---|---|---|---|---|
| Solvency Tax | Yes | Yes | Yes | No (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | No | No |
| Loan and Interest Repayment Surtaxes | Yes | No (differs) | Yes | No (differs) |
| Reserve Taxes | No | No | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | No | Yes (differs) | Yes (differs) | Yes (differs) |
| Temporary Disability Insurance | No | No | Yes (differs) | Yes (differs) |
| Voluntary Contributions | No | Yes (differs) | Yes (differs) | Yes (differs) |
| Years to Qualify for Experience Rating | 1 | 3 (differs) | 1.5 (differs) | 3 (differs) |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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