Since 1997, Connecticut residents have enjoyed a two tier income tax rate, with 3 percent tax being levied on the first portion of Connecticut taxable income and 4.5 percent on the balance. The credit is for property tax paid during 1999 on a primary residence or a motor vehicle. The Connecticut succession tax continues its scheduled incremental phaseout that began in 1997. In addition, several changes have been made to corporation business tax credits to make them easier to understand and apply. Businesses should contact the Department of Revenue Services, Taxpayer Services Division, for the updated guide explaining these changes.
New legislation directed at bringing financial service industries to Connecticut goes into effect.
Heralded as a bold step forward in tax administration, Connecticut has established a single-factor gross receipts formula for the apportionment of net income of financial services companies. The taxable net income will be sourced to the billing address of the company's customers. A new exemption from sales and use taxes goes into effect for manufacturers. S corporations will no longer be subject to the corporation business tax after January 1, 2001. Taxpayers will also find that notarization requirements are being removed from many Connecticut tax forms to make them more user-friendly.