Connecticut Legislature Approves Bill Increasing Taxes

 

Citations: Legislation Text: CT H 6495
Effective Date: See below
Taxing Authority: CT

Forms Affected:

• Form CT-1040, Connecticut Resident Individual Income Tax Return
• Form CT-1040NR/PY, Connecticut Nonresident/Part Year Resident Individual Income Tax Return
• Form CT-1041, Connecticut Estate/Trust Income Tax Return
• Form CT-1120, Connecticut Corporation Business Tax

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Both houses of the Connecticut legislature have enacted legislation that increases corporate, individual and estate/trust income tax rates and also increase other taxes.

Corporate Business Tax: The legislation provides that, for tax years that begin in 2003, there will be a 20% surcharge imposed on top of the regular corporate tax liability before credits.

Individual Income Tax: In 2002, individuals were subject to income tax at the following tax rates: (1) Single or married filing separately filing status: 3% of the first $10,000 of Connecticut taxable income and 4.5% of the excess over $10,000, (b) Head of household filing status: 3% of the first $16,000 of Connecticut taxable income and 4.5% of the excess over $16,000 and (c) Married filing joint or surviving spouse filing status: 35 of the first $20,000 of Connecticut taxable income and 4.5% of the excess over $20,000. The legislation provides that for tax years beginning after Dec. 31, 2002, the 4.5% tax rate in (a), (b) and (c) is increased to 5%.

Estate/Trust Income Tax: The legislation increases the income tax rate on estates and trusts from 4.5% to 5% for tax years that begins after Dec. 31, 2002.

Withholding Taxes: The Connecticut Department of Revenue Services has issued withholding tax tables. The new tables will be effective for the period from Mar. 1, 2003 through Jun. 30, 2003. These tables include “catch-up” withholding to reflect that the increased income tax rates became effective on Jan. 1, 2003. These tables are available at http://www.drs.state.ct.us/forms/03withholdingtablesff.Mar2003.htm. The DRS announced that withholding tables that will be effective after Jun. 30, 2003 will be issued later this year.

Estimated Taxes: The legislation provides that regardless of other provisions, taxpayers that are required to make an estimated tax payment in June must adjust that payment to reflect the new tax rates that are in effect in 2003.

Other Tax Increases: The legislation also increases cigarette, real estate conveyance and business entity and sales taxes.