Tax hikes on the way for Connecticut residents

By Tami Luhby, senior writer


NEW YORK (CNNMoney) -- Connecticut residents: Get ready to pay more taxes!

Governor Dannel Malloy on Wednesday signed a $40.1 billion budget that raises taxes on sales, income, cigarettes and corporations. The budget should bring in $2.5 billion in additional levies over the next two years.

The biennial plan, which also cuts spending by $2.2 billion, depends on state employees agreeing to $2 billion in concessions between now and 2013. The governor said he could send out more than 4,000 layoff notices to the state's roughly 50,000 workers soon if a deal isn't reached.

Unlike many of his peers, Malloy chose to increase taxes, rather than dramatically cut spending to close his state's $3.3 billion budget shortfall. Only a handful of governors are proposing tax hikes this year.

Under the budget, the state sales tax will rise to 6.35% from 6%, while cigarette taxes climb to $3.40, from $3 in the new fiscal year, which starts July 1. Larger corporations will see a 20% income surcharge, replacing a current 10% surcharge.

Residents earning more than $100,000 will pay higher income taxes due to a hike in marginal rates, while those buying pricey cars, boats, jewelry and clothing will pay a 7% luxury goods tax. The state will also extract a tax on estates and gifts greater than $2 million, as opposed to the current $3.5 million threshold.

Like to hear live music in a bar? Be prepared to pay a 3% cabaret tax. Get caught speeding? You'll fork over a $15 fee, up from $10, on top of the fine.

Residents will pay sales taxes on more services, such as pet grooming, spa treatments and yoga. Clothing and footwear under $50 will be subject to tax too.

The news isn't all bad, however. A 3-cent hike in the gas tax was dropped. And the budget increases the amount of business tax credits available for job creation to $20 million, up from $11 million. It also creates a state earned income tax credit for low-wage workers. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,195.42 221.11 1.30%
Nasdaq 4,566.14 16.91 0.37%
S&P 500 1,994.65 12.35 0.62%
Treasuries 2.30 -0.02 -0.77%
Data as of 7:36pm ET
Company Price Change % Change
Facebook Inc 74.11 -1.75 -2.31%
Bank of America Corp... 17.03 0.04 0.24%
Intel Corp 32.58 -1.34 -3.95%
Avon Products Inc 9.97 -0.99 -9.03%
Apple Inc 106.98 -0.36 -0.34%
Data as of 4:03pm ET

Sections

'Chevy Guy' Rikk Wilde became a viral sensation bumbling his way through a World Series presentation Wednesday night. More

An annual federal government census found about 578,000 homeless individuals nationwide, down about 2% from last year. More

Microsoft's new Band smartwatch claims to make you a better human, and to know you better than you know yourself. More

San Francisco-based Tumml is an accelerator fostering 'urban impact start-ups' that aim to tackle civic problems -- and turn a profit. More

Amy Kukec thought leaving her abusive husband would be the beginning of a new life, but so far she's hit one debilitating financial roadblock after another. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.