Connecticut Business Taxes for LLCs

Filing fee: $120 (LLC Articles of Organization)

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State agency: Connecticut Secretary of the State

Annual report due: March 31 each year (annual report filed with the Secretary of the State)

State tax rate: Connecticut personal income tax: 2%–6.99% (graduated rates); Connecticut sales tax: 6.35% (state rate); No franchise tax; No state-level LLC franchise or privilege tax

Connecticut LLCs don't pay a corporate income tax at the entity level. Instead, profits pass through to the owners, who report them on their personal Connecticut and federal returns. Depending on how your LLC is set up, you may also owe sales tax, self-employment tax, and — if you have employees — payroll withholding taxes.

• No corporate income tax at the LLC level — profits pass through to owners
• Owners pay Connecticut personal income tax on their share of LLC profits
• Owners pay federal self-employment tax (15.3%) on net earnings
• LLCs selling taxable goods or services collect and remit Connecticut sales tax at 6.35%
• LLCs with employees withhold Connecticut income tax and file Form CT-941 with the Connecticut Department of Revenue Services (DRS)
• Multi-member LLCs file federal Form 1065 (U.S. Return of Partnership Income) by March 15

Connecticut taxes your LLC based on how it's classified for tax purposes — not on the LLC structure itself. A single-member LLC is taxed as a sole proprietorship by default. A multi-member LLC is taxed as a partnership. Either can elect S Corporation or C Corporation treatment, which changes the tax picture significantly.

Most Connecticut LLC owners report business income on their personal state return using Form CT-1040. The state uses graduated income tax rates ranging from 2% to 6.99%, depending on your income level. Connecticut doesn't have a franchise tax or a separate LLC privilege tax, which is one less thing to track compared to states like California.

Connecticut has 2 main state-level taxes that affect most LLCs: personal income tax on pass-through profits and sales tax on taxable transactions. Both are administered by the Connecticut Department of Revenue Services (DRS).

Connecticut personal income tax

LLC owners report their share of business profits on their Connecticut personal income tax return (Form CT-1040). The state applies graduated rates from 2% to 6.99%. You can reduce your taxable income using Connecticut's standard deductions and allowable business deductions — a tax professional can help you figure out which ones apply to your situation.

Connecticut sales tax

If your LLC sells taxable goods or certain services in Connecticut, you need to collect sales tax from customers and remit it to the DRS. The statewide rate is 6.35%. Connecticut doesn't have local sales tax add-ons — the 6.35% rate applies uniformly across the state, which keeps the math straightforward. Register for a sales tax permit through the DRS before you start collecting.

Estimated tax payments

If you expect to owe $1,000 or more in Connecticut income tax for the year, you need to make quarterly estimated payments to the DRS. The same threshold applies at the federal level. Missing estimated payments can mean underpayment penalties at both the state and federal level, so it's worth setting aside a portion of each payment you receive throughout the year.

Connecticut LLC owners pay federal taxes on their share of business profits, regardless of whether they take a distribution. Because LLCs are pass-through entities by default, the IRS taxes the income at the owner level — not the business level.

Self-employment tax

Single-member LLC owners and active partners in multi-member LLCs pay self-employment tax at 15.3% on net earnings up to $176,100 (2025 threshold), then 2.9% on earnings above that. This covers Social Security and Medicare contributions that an employer would otherwise split with you. You can deduct half of the self-employment tax you pay when calculating your federal adjusted gross income.

Federal income tax

LLC profits are reported on your personal federal return (Form 1040) and taxed at your individual rate. Multi-member LLCs also file Form 1065 — the U.S. Return of Partnership Income — by March 15 each year. Form 1065 is an informational return; it reports the LLC's income and allocations to the IRS, and each member receives a Schedule K-1 showing their share.

If your LLC has employees, you take on a separate set of tax obligations at both the state and federal level. Connecticut employers must register with the DRS for a withholding account before paying any wages.

Connecticut income tax withholding

Connecticut employers withhold state income tax from employee wages using the rates on Form CT-W4, which each employee fills out at hire. You file Form CT-941 with the DRS monthly or quarterly, depending on how much you withhold. The filing frequency is assigned when you register — check your DRS account to confirm yours.

Federal payroll taxes

On top of state withholding, you withhold federal income tax, Social Security (6.2%), and Medicare (1.45%) from each employee's paycheck — and match the Social Security and Medicare contributions as the employer. Deposit these using the IRS Electronic Federal Tax Payment System (EFTPS) and file Form 941 quarterly. A payroll provider or accountant can handle the mechanics, but the liability stays with the LLC.

Employee tax returns

Withholding doesn't eliminate your employees' filing obligations. Each employee still needs to file their own Connecticut and federal tax returns. Your job is to issue W-2s by January 31 so they have what they need.