Connecticut taxes for online sellers: sales tax, nexus, the PET, and Fairfield County property tax

Connecticut is home base for sellers in Fairfield County and a destination state for everyone else who ships here. Its sales tax has a simple rate structure and strict registration rules, and its income tax includes an elective entity-level tax that matters for S corps.

Sales tax rates

Connecticut charges 6.35% statewide on most goods, with no local add-ons in any town. Shipping and delivery charges on taxable orders are part of the taxable price, whether or not you list them separately.

• Digital goods, including e-books, audiobooks, music, video and other electronically delivered audio, visual and reading material, are taxed at the full 6.35%, with narrow exceptions such as newspapers.
• Business software and computer services you buy are taxed at 1%. The rate covers canned software accessed or downloaded for business use, and computer and data processing services. To get the 1% rate, give the vendor your business name and address, the name and title of the person ordering, and the fact that you're buying as a business. Software for personal use, or delivered on physical media, is 6.35%.
• Luxury items are taxed at 7.75%: clothing, footwear, handbags, luggage, umbrellas, wallets and watches over $1,000, and jewelry over $5,000.
• Sales Tax Free Week in August now exempts clothing and footwear priced under $300 per item, up from $100.

When you have nexus in Connecticut

If you're based in Connecticut, you have nexus from your first sale. Out-of-state sellers need both $100,000 of gross receipts and 200 or more retail sales into Connecticut, or a physical presence such as inventory.

Connecticut measures the remote-seller test over the 12 months ending the September 30 before the filing period in question. Two details catch out-of-state sellers:

• Marketplace sales count toward the thresholds, because DRS guidance includes sales made through Amazon, Etsy and other facilitators.
• Inventory at a marketplace facilitator's Connecticut warehouse, such as FBA stock, requires an out-of-state seller to register even below the thresholds. By contrast, goods held by an unaffiliated fulfillment company that is not a marketplace and ships your orders out of state don't by themselves make you a Connecticut retailer.

A brand based in Westport or Norwalk can't rely on the $100,000-and-200 test at home. Your sales into other states are a separate question, which our sales tax nexus guide covers.

Key numbers: 6.35% sales tax, no local add-ons · digital goods 6.35%, electronically delivered business software 1% · remote sellers: $100,000 and 200 sales · $100 permit · annual filing under $1,000 of tax a year, quarterly under $4,000 · PET 6.99% with an 87.5% credit · retail inventory exempt from property tax.

What marketplaces collect and what stays with you

Amazon, Etsy, eBay and Walmart collect and remit Connecticut tax on the taxable sales they facilitate to Connecticut addresses. Your own website, wholesale orders and in-person sales remain your responsibility.

For this purpose, a marketplace facilitator is a platform that facilitated at least $250,000 of sales for third-party sellers in the prior 12 months, counting sales everywhere. The following obligations stay with you:

• On your Shopify store, you're the retailer, so set the store to charge 6.35% on taxable orders shipped to Connecticut, shipping included.
• Keep the marketplace agreement that says it collects and remits, or a Form DRS-055 Certificate of Collection, as proof. That document relieves you of collecting on those sales.
• Once registered, report marketplace sales as gross receipts on Form OS-114 and deduct them as sales through a registered marketplace facilitator.
• For wholesale orders, keep a resale certificate from each Connecticut retailer you sell to. Without one, the sale is presumed taxable.
• Selling at pop-ups and craft fairs requires a permit, even for one day.

Registration and the permit

Register on myconneCT before your first sale. The permit costs $100 per location.

This requirement also applies to Connecticut sellers who sell only through marketplaces. DRS requires them to register and generally sets them up as annual filers. Permits issued since October 2017 expire every two years unless renewed. Selling without one costs $250 for the first day and $100 for each day after.

Filing frequency

DRS sets your frequency from your tax liability over the 12 months ending the previous June 30:

Returns are due the last day of the month after the period. Annual returns are due January 31. Because January 31 is a Sunday, the 2026 return is due February 1, 2027. File Form OS-114 electronically, even for periods with no sales.

Form 1099-K in Connecticut

Connecticut follows the federal threshold and has no lower trigger of its own. Platforms generally issue a 1099-K only when payments exceed $20,000 and transactions exceed 200, though some send one below that.

DRS receives a copy of every federal 1099-K for a payee located in Connecticut within 30 days of the platform filing it with the IRS. Your Connecticut return starts from federal adjusted gross income, so the reconciliation in our 1099-K guide carries over directly.

How Connecticut taxes your profit

Profit is taxed through the personal income tax, at rates of 2% to 6.99%, whether you're a sole proprietor or an S corp owner.

• For sole proprietors and single-member LLCs, Schedule C profit flows into federal AGI, Connecticut's starting point, and is taxed on Form CT-1040. The 6.99% top rate applies above $500,000 of taxable income for single filers and $1,000,000 for joint filers.
• An S corporation pays no Connecticut corporation business tax on its income. It files Form CT-1065/CT-1120SI, which for calendar 2026 is due March 15, 2027, and issues Schedule CT K-1s. You report your share on your own return.
• The federal 20% QBI deduction is taken after AGI, so it doesn't reduce Connecticut tax.
• For equipment write-offs, Connecticut adds back all federal bonus depreciation and 80% of a §179 deduction, then deducts 25% of each add-back in each of the next four years.
• If your Connecticut tax after withholding and PET credits will be $1,000 or more, pay estimates on Form CT-1040ES. The last 2026 installment is due January 15, 2027.

When the PET election pays

Your S corp should elect only if the federal deduction the PET creates is worth more than the net Connecticut cost. That cost is the 12.5% of the tax that Connecticut doesn't credit back, less the Connecticut tax you save because the PET lowers the S corp income you report.

The pass-through entity tax is optional for partnerships and S corporations. A single-member LLC taxed as a sole proprietorship can't elect it. The entity pays 6.99% on its Connecticut-source income plus its resident owners' share of the rest, and each individual owner gets a refundable credit for 87.5% of their share. Because the entity deducts the tax, the deduction isn't limited by the federal SALT cap on itemized deductions. That cap is $40,400 for 2026, reduced once modified AGI passes $505,000, but never below $10,000.

• The election is annual and irrevocable. It is made by checking the box on a timely filed CT-1065/CT-1120SI, including a return filed on extension, and it can't be made or changed on an amended return.
• For calendar 2026, CT-PET is due March 15, 2027, or September 15, 2027, with an extension. The extension covers filing, not payment, and electing entities generally must make estimated payments during the year.

Property tax on inventory and equipment

Connecticut towns can't tax a retailer's or wholesaler's inventory, but they do tax the equipment, furniture and fixtures a business owns.

• List business property you own on October 1 with the assessor of the town where it's kept, by November 1, or the next business day if that date falls on a weekend. If you ask in writing by November 1, the assessor can allow up to 45 more days for good cause.
• A late declaration, or one that leaves items off, adds a 25% penalty to the assessment.
• The tax bill equals 70% of the assessor's value times the town's mill rate. Across Fairfield County, FY2027 town rates run from 10.125 mills in Greenwich to 37.73 in Stratford.

A worked example: a Westport Shopify brand

In this hypothetical illustration, Dana runs a home-goods brand from Westport as an S corporation. In 2026 it sells $900,000: $600,000 on Amazon with FBA and $300,000 on its Shopify store. Shopify orders shipped to Connecticut total $48,000 of merchandise plus $2,400 of shipping charges.

1. Amazon collects Connecticut tax on Amazon orders as the facilitator. Dana reports her Connecticut Amazon sales on Form OS-114 and deducts them.
2. Tax on Shopify orders is ($48,000 + $2,400) × 6.35% = $3,200.40. Because the business is in Westport, it owed this tax from its first sale.
3. At $3,200.40 a year, the liability falls in the $1,000-to-$4,000 band, so once DRS measures a full 12 months ending June 30, the brand files quarterly.
4. For property tax, inventory in its rented storage unit is exempt, but its shelving, computers and camera gear aren't. If the assessor values them at $18,000, the assessment is $12,600, and at Westport's current FY2027 rate of 13.20 mills the bill would be about $166.32. The actual bill uses the following year's rate once the town sets it.
5. After Dana's salary, the S corp earns $200,000, all subject to the PET. Electing the PET costs $13,980 at the 6.99% rate. Dana gets a refundable credit of 87.5%, or $12,232.50, leaving $1,747.50 uncredited. Because she doesn't add the PET back, her Connecticut taxable income also falls by $13,980. At a 6.9% Connecticut rate that saves about $964.62, so her net Connecticut cost is about $782.88. The election pays only if the S corp's $13,980 federal deduction saves her more than that, which depends on her own state and local taxes relative to the SALT cap and on her QBI deduction. Model both returns before checking the box.

Common mistakes

1. Assuming the $100,000-and-200 test protects a Connecticut-based seller. It applies only to sellers outside the state.
2. Leaving shipping out of the taxable amount on Connecticut orders.
3. Skipping registration because Amazon or Etsy collects the tax.
4. Paying 6.35% on business software subscriptions or downloads when the 1% rate for electronically delivered business software applies.
5. Missing the November 1 property declaration and taking the 25% penalty.
6. Electing the PET without comparing the federal benefit with the net Connecticut cost, which is the uncredited 12.5% less the Connecticut tax saved on the lower income, or missing the extended return deadline to elect.

How Summer Associates helps

Summer Associates, based in Stamford, registers Connecticut sellers with DRS, reviews nexus in the other states you ship to, reconciles 1099-Ks, prepares S corp and individual returns, and models whether the PET pays before the election is made.

This guide is general education based on federal and Connecticut law as of 2026-11-15. State rules differ and facts matter. Before acting, get advice for your situation from Summer Associates or another qualified advisor.