Understanding whether services are taxable in Connecticut is essential for any business owner offering professional, personal, or digital services in the state. Connecticut’s tax code is unique: while many services remain exempt, a wide range of “enumerated services” such as data processing, real property maintenance, and telecommunications are fully taxable. Navigating these distinctions can be confusing, especially when bundled services or partial exemptions apply.
This guide breaks down which services are taxable, which are exempt, and how to stay compliant. For businesses that want clarity and efficiency, Hands Off Sales Tax (HOST) provides end-to-end sales tax compliance support in Connecticut and beyond.
What Do We Mean by “Services”?
Getting clarity on what counts as a “service” — versus a product or a digital good — is essential for correctly navigating Connecticut’s sales tax rules. Here’s how Connecticut defines and taxes services.
Defining “Service” vs. Product vs. Digital Good
- “Service” vs “Tangible Product”: A service generally refers to non-physical actions or labor — such as data processing, real property maintenance, or consulting. In contrast, a product is a tangible item sold or used — like equipment or printed materials.
- Digital Goods: Items such as e-books, music downloads, or streaming content, although delivered electronically, are treated as tangible personal property, and taxed accordingly under Conn. Gen. Stat. § 12‑407(a)(13).
- Clear distinctions are critical — your classification may determine whether a transaction is taxable.
What Are “Enumerated Services”?
Connecticut only taxes services that are specifically listed in statute. These “enumerated services” are defined in Connecticut General Statutes § 12‑407(a)(37). If a service isn’t on this list, it’s generally exempt from tax.
Some key taxable services include:
- Health and athletic club services (e.g., personal training, tanning)
- Pet grooming and boarding (unless part of veterinary services)
- Management consulting and business analysis
- Computer and data processing services (like website hosting, software support)
- Contractor and real property services (e.g., janitorial, HVAC, painting)
- Personal services, towing, window cleaning, and more
All listed ENTIRELY under § 12‑407(a)(37), denoting taxable status.
Understanding Connecticut’s distinction between services, products, and digital goods — and recognizing which services are explicitly taxable — is foundational to compliance. When in doubt, consult the statute or reach out to a professional for classification guidance.
The Taxable Services Spectrum in Connecticut
To navigate Connecticut’s service tax landscape effectively, you’ll need to understand the broad array of services that are explicitly taxed. Here’s a deeper breakdown with official references and practical context.
Key Categories of Taxable Services
- Computer and Data Processing Services (1%)
This category includes services such as programming, code writing, software installation and maintenance, data storage, and consulting services—even when related to custom software—as long as the benefit is received in Connecticut. These services are taxed at a special 1% rate, significantly lower than the standard tax rate. Notably, general website development or hosting services provided to a recipient for their own site are exempt; however, charges for accessing third-party-maintained websites are taxable. - Telecommunications Services
Telephone and data transmission services are part of the enumerated services and generally subject to the standard 6.35% rate under Conn. Gen. Stat. § 12-407. Similar inclusions show up in the CT DRS service tax listings. - Repair of Tangible Personal Property
Repairs to items like electronics, machinery, or consumer goods are taxable under this category. These fall under the umbrella of enumerated services and are taxed at the regular rate. - Services to Real Property
Services such as janitorial work, HVAC, painting, landscaping, and other building maintenance are taxable. Connecticut labels many of these as “services to income-producing or real property” in its statutes. - Personal Services
This category covers things like health club memberships, tanning, skincare, and other aesthetic services. These fall under enumerated services and are taxed at the standard rate. - Miscellaneous Services (e.g., Towing, Car Washes, etc.)
These are also expressly listed among enumerated services and are subject to the 6.35% rate.
Summary Table: Connecticut’s Taxable Services
| Service Category | Tax Rate |
| Computer & Data Processing Services | 1% |
| Telecom Services | 6.35% |
| Repair of Personal Property | 6.35% |
| Real Property Services (e.g., HVAC) | 6.35% |
| Personal Aesthetic Services (e.g., tanning) | 6.35% |
| Miscellaneous (e.g., towing, car washes) | 6.35% |
By understanding this spectrum of taxable services—from tech and telecom to real property and personal services—you’ll be better positioned to comply with Connecticut’s sales tax rules, accurately assess tax obligations, and confidently classify your offerings.
What’s Exempt—and Why Some Common Assumptions Fail
Let’s clarify what falls outside Connecticut’s sales tax net—and why automatically assuming all professional or essential services are exempt can lead to costly missteps.
Services Generally Not Taxed
Connecticut taxes only those services explicitly listed as taxable in Conn. Gen. Stat. § 12‑407. Services not enumerated are generally exempt from sales tax. But a common mistake is assuming certain categories—like professional services—are exempt across the board, when in fact it depends on specifics.
Common Exemptions: Professional & Personal Services
- Professional Services such as legal advice, accounting, consulting, and healthcare are generally exempt—but only if no tangible item is produced or delivered. Should the service result in a tangible item (e.g., printed reports or materials), the exemption may not apply. This nuance is essential for proper tax treatment.
- Medical and Educational Materials—like textbooks (sold to students), magazines by subscription, certain medical equipment, food for home consumption, and Internet access—are formally exempt under Conn. Gen. Stat. § 12‑412.
Why Assumptions Can Mislead
- Professional services without tangible results are typically exempt. But if the service includes deliverables—like printouts, reports, or USB drives—the transaction may be partially or fully taxable.
- Products vs Services Overlap: Exempt goods (like educational materials) don’t automatically mean services related to them are exempt, especially when they fall outside statutory carve-outs.
Quick Snapshot
| Service Type | Taxable? | Notes |
| Professional services delivering advice | Exempt | No tangible goods provided |
| Same services with printed deliverables | Taxable? | Depends: physical deliverable may change the tax status |
| Educational materials (e.g., textbooks) | Exempt | Under Conn. Gen. Stat. § 12-412 |
| Internet access and magazines | Exempt | Explicit statutory exemptions |
By recognizing the subtleties in what’s exempt—and when exemption doesn’t hold—you’ll avoid overcharging customers and underreporting to the DRS.
Decision Tree: Is My Service Taxable in CT?
To simplify whether your service is taxable in Connecticut, use this clear decision framework. Each step ensures you’re making correct taxability determinations—saving time and avoiding errors.
Step 1: Is Your Service “Enumerated”?
Consult Connecticut’s official list in Conn. Gen. Stat. § 12‑407 and the Department of Revenue Services resource “Services Subject to Sales and Use Taxes.” Only services expressly listed (like data processing, real property services, telecom, and personal services) are taxable. If your service isn’t on the list, it’s typically exempt.
Step 2: Which Category Applies?
If it’s enumerated, determine where it fits:
- Digital/technology (e.g., computer or data processing, taxed at 1%)
- Telecommunications
- Repair services (tangible personal property)
- Real property services (e.g., maintenance, janitorial)
- Personal services (e.g., tanning, fitness)
If your service falls within one of these categories, it’s taxable at the applicable rate.
Step 3: Are You Bundling with Property or Non-Taxable Services?
Bundled offerings—such as a service combined with tangible goods—may be taxable if not clearly itemized. You must separately state charges for taxable and non-taxable components to avoid applying tax to the whole bundle.
Quick Decision Flow
- Is the service listed in Conn. Gen. Stat. § 12-407(a)(37)?
– No → Exempt
– Yes → Proceed to next step - Which category matches your service?
– Assign the correct rate (1% for certain digital services; 6.35% for others) - Bundled items involved?
– Yes → Ensure clear itemization on invoice
– No → Tax applies only to the service
By following this decision tree, you can confidently assess whether a particular service is taxable in Connecticut, and ensure clean, compliant invoicing and tax reporting.
Compliance Workflow for Taxable Services
Here’s a clear roadmap for businesses providing taxable services in Connecticut—covering nexus determination, registration essentials, filing requirements, and documentation best practices.
Economic & Physical Nexus Fundamentals
- Physical Nexus is established if your business has a tangible presence in Connecticut—such as an office, employee, or inventory.
- Economic Nexus applies if, within a 12-month period ending September 30, you meet both thresholds: $100,000 in gross receipts and 200 or more transactions into Connecticut. This rule has been in effect since July 1, 2019.
Registration, Filing, and Documentation Steps
- Once nexus is triggered, register for a Connecticut sales tax permit through the DRS’s Taxpayer Service Center (TSC).
- Upon registration, the Department of Revenue Services (DRS) assigns your filing frequency—monthly, quarterly, or annually—depending on your tax liability.
- You are required to file returns for each period—even if no tax was collected—by submitting a zero return. Failure to do so can result in penalties or interest.
Essential Documentation Practices
- Itemize invoices: Clearly distinguish between taxable services and any non-taxable work or materials. This helps prevent misclassification.
- Maintain records of registration, filed returns (including zero returns), and invoices. This ensures you’re audit-ready and can demonstrate compliance if needed.
Summary Table
| Step | Action Required |
| Assess Nexus | Determine if economic ($100K and 200 transactions) or physical nexus applies |
| Register | Use the Connecticut DRS Taxpayer Service Center to obtain a sales tax permit |
| File Timely | Submit returns on schedule—even zero-tax periods—to avoid penalties |
| Document | Keep detailed invoices and records to support tax filings |
By following this workflow—from nexus evaluation to proper documentation—you’ll ensure accurate tax compliance for services in Connecticut.
Let HOST Simplify Service Tax Compliance in Connecticut
Connecticut’s service tax rules are full of nuances—from differentiating “enumerated services” to handling bundled offerings and keeping up with nexus thresholds. For many businesses, staying compliant requires constant monitoring and specialized expertise. Hands Off Sales Tax (HOST) was built to take that burden off your plate and provide an end-to-end compliance solution.
Comprehensive Services HOST Provides
- Nexus Analysis: HOST reviews your sales activity to determine if you’ve triggered physical or economic nexus in Connecticut (e.g., $100,000 in sales and 200 transactions).
- Sales Tax Registration: We handle your registration with the Connecticut Department of Revenue Services through the myconneCT portal, ensuring you’re properly set up from the start.
- Filing & Remittance: HOST prepares and files your returns accurately and on time, including “zero-tax” returns when no taxable services were sold.
- Audit Defense & Documentation: If DRS audits your business, HOST provides record organization, filing history, and direct support during the process.
- Resale Certificate Generation: Generate valid and compliant resale certificates for all vendors and for all jurisdictions, using the proprietary ResaleCertify platform.
- Tax Matrix Creation: We build a tailored taxability map for your services so you know exactly what’s taxable and what isn’t.
- Platform Integrations: HOST integrates with Shopify, Stripe, and other platforms to automatically sync sales data for stress-free compliance.
With HOST, you gain confidence knowing every aspect of your Connecticut service tax compliance is covered—accurately, consistently, and without distraction from running your business.
Conclusion: Stay Compliant, Stay Confident in Connecticut
Connecticut’s service tax rules are complex, with only certain “enumerated services” subject to tax while others remain exempt. Misclassifications, bundling errors, or overlooking nexus obligations can quickly lead to penalties and compliance headaches. By understanding which services are taxable, how exemptions apply, and the importance of accurate documentation, businesses can protect both their revenue and their reputation. Still, managing all of this internally takes significant time and resources. That’s why HOST offers an all-in-one solution, so you can focus on running your business while staying fully compliant in Connecticut and beyond.
Frequently Asked Questions (FAQs)
1. Are all services taxable in Connecticut?
No. Only “enumerated services” listed in state law are taxable, such as computer/data processing, telecommunications, real property maintenance, and certain personal services. Most professional services like legal or accounting remain exempt unless they involve tangible deliverables.
2. What is the sales tax rate on services in Connecticut?
The standard rate is 6.35%, but computer and data processing services are taxed at a reduced 1% rate. Other enumerated services, including real property and personal services, are taxed at the standard rate.
3. Do contractors have to charge sales tax in Connecticut?
Yes, but only for specific services. Labor on new construction is generally exempt, while services like janitorial, HVAC, landscaping, and renovations on existing property are taxable. Contractors must also pay sales tax on materials they purchase unless resale rules apply.
4. What happens if I mistakenly charge tax on an exempt service?
You must first refund or credit the customer, then file an amended return or refund claim with the Department of Revenue Services. Maintaining documentation is crucial to support your claim.
5. Do I need to file a return if I don’t sell taxable services?
Yes. Once you are registered for sales tax, you must file returns for each assigned period—even if no tax was collected—by submitting a “zero return.”
