Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Search for Jobs

Index Last Change % Change
Dow 20,763.89 216.13 1.05%
Nasdaq 5,983.82 73.30 1.24%
S&P 500 2,374.15 25.46 1.08%
Treasuries 2.27 0.04 1.61%
Data as of 6:44am ET
Company Price Change % Change
Bank of America Corp... 23.63 0.92 4.05%
General Electric Co 29.55 0.00 0.00%
Chesapeake Energy Co... 5.38 -0.14 -2.54%
Ford Motor Co 11.43 0.09 0.79%
Freeport-McMoRan Inc... 12.23 0.00 0.00%
Data as of Apr 24
Sponsors

Sections

Wells Fargo's board of directors is under fire ahead of Tuesday's annual shareholder meeting amid criticism the board failed to do enough to prevent the fake account scandal. More

As President Donald Trump seeks to fulfill his campaign pledge to create millions more jobs, the high-growth health care industry would seem a promising place to turn. But Trump campaigned to repeal Obamacare and lower health care costs ? which could be a serious job killer. More

Samsung says the software update will give users more control over the color of the Galaxy S8 screen. More

The Canadian province of Ontario is set to give thousands of dollars to low-income residents to see if its improves their health and job prospects. More