# Connecticut Contractor Taxes and Licensing: What Every Trade Should Know

Connecticut taxes many contractor services at 6.35%, and the type of property decides it. Labor on existing commercial, industrial or rental property is generally taxable, while labor on new construction or an owner-occupied home of up to three units usually isn't. You pay tax on materials either way, and residential contractors register with the Department of Consumer Protection.

## Key takeaways

- Property type drives the tax: services to existing commercial, industrial and income-producing property are generally taxable at 6.35%.
- Labor on new construction and owner-occupied homes of one to three units usually isn't taxed, except for services taxable everywhere like landscaping and maintenance.
- You're the consumer of materials. Pay tax when you buy, and every contractor needs a DRS Sales and Use Tax Permit before starting work.
- Residential remodelers register with the Department of Consumer Protection ($220 a year); electricians, plumbers and HVAC techs need DCP trade licenses.
- Income tax runs 2.00% to 6.99% for 2026, and the pass-through entity tax is now optional.

## How does Connecticut treat contractors differently?

Connecticut puts sales tax on a long list of services, and building work is on it. The Department of Revenue Services (DRS) builds the rule around **who owns the property and how it's used**, not just the trade. Its Building Contractors' Guide (IP 2018(2)) says services to existing industrial, commercial and income-producing property "are generally taxable, unless the purchaser is exempt." Re-roof a landlord's rental and the labor is taxed. Re-roof the house the owner lives in and it usually isn't.

Registration starts before the first job. DRS says building contractors and subcontractors "must obtain a Sales and Use Tax Permit from DRS prior to providing any services," even if those services aren't taxable or the customer is exempt. Out-of-state outfits face extra steps covered below.

## Do Connecticut contractors charge sales tax on labor?

Sometimes. The general rate is **6.35%**, per DRS. IP 2018(2) says your labor is taxable when the work is on existing commercial, industrial or income-producing real property, or when it's one of the services taxable to all real property. Labor isn't taxable on new construction or owner-occupied residential property (outside that "all property" list), among other exceptions such as charitable organizations and qualifying government agencies.

- **Owner-occupied residential**, per DRS: used only as a residence, one to three dwelling units, and the owner lives there or will after the work.
- **Taxed on all property:** carpet cleaning, exterminating, house washing, janitorial, landscaping, locksmith services, maintenance, snow plowing, pool cleaning and maintenance, and window cleaning.
- **Taxed on existing commercial, industrial or income-producing property:** a long list that includes air conditioning, carpentry, electrical, heating, plumbing, painting, roofing, siding, flooring, masonry and paving.
- **New construction** includes a new building, an addition that expands cubic footage, and gutting a building's entire interior. Use CERT-104 to document the share of work that is new construction.

DRS defines the taxable service charge as everything above your cost of materials plus the tax you paid on them: labor, markup, overhead, tool rental and reimbursed expenses. You can show the tax separately or bill one total marked "sales tax included on services." Either way, tax you collect is held in trust and all of it goes to DRS; you can't offset it against tax you paid on materials. Compare other states in [sales tax on labor vs. materials](https://www.brix.so/learn/sales-tax-on-labor-vs-materials).

## What about materials, permits and out-of-state purchases?

IP 2018(2) says contractors "are considered to be the consumers of the materials and supplies" they use, so you pay sales tax when you buy and can't use a resale certificate. The exceptions are narrow: you run a store that sells building supplies, or you sell specific materials to the owner and list the charge, the exact quantity and a separate install price on the invoice. Tools, ladders and scaffolding are always taxable to you.

- **Use tax:** if you buy from an out-of-state vendor that doesn't collect Connecticut tax, or pay less than 6.35% elsewhere, you self-assess the difference on your sales tax return.
- **Exempt customers:** on jobs for qualifying exempt organizations, give your suppliers CERT-141, Contractor's Exempt Purchase Certificate, for materials that stay in the project.
- **Condo associations:** tax applies to the share of units that are rentals, documented on CERT-103.

Nonresident contractors have bond rules. An unverified prime contractor must file a surety bond for 5% of the project price with DRS when the whole project is $250,000 or more, and a prime must hold back 5% from an unverified subcontractor until the sub provides Form AU-968. See [use tax for contractors](https://www.brix.so/learn/use-tax-for-contractors) for tracking purchases.

## What licenses and registrations does Connecticut require?

**Connecticut contractor credentials (Department of Consumer Protection)**

| Trade | Agency | License or registration | Link |
| --- | --- | --- | --- |
| Home improvement | Department of Consumer Protection (DCP) | Home Improvement Contractor registration: $220 fee, $20,000 general liability insurance, expires March 31 each year | [DCP home improvement](https://portal.ct.gov/dcp/license-services-division/all-license-applications/home-improvement-applications) |
| New home construction | DCP | New Home Construction Contractor registration: $240 plus $120 guaranty fund fee | [DCP new home construction](https://portal.ct.gov/dcp/license-services-division/all-license-applications/new-home-construction-contractor-applications) |
| Electrical | DCP Occupational and Professional Licensing | State electrical license; limited licenses for low voltage, signs and solar PV | [DCP trade license types](https://portal.ct.gov/dcp/occupational-and-professional-division/occupational--profess/careers-in-the-trades-license-types) |
| Plumbing | DCP Occupational and Professional Licensing | State plumbing and piping license; limited licenses for items like water, sewer and storm lines or lawn sprinklers | [DCP trade license types](https://portal.ct.gov/dcp/occupational-and-professional-division/occupational--profess/careers-in-the-trades-license-types) |
| HVAC | DCP Occupational and Professional Licensing | State heating, piping and cooling license; sheet metal licenses for ductwork | [DCP trade license types](https://portal.ct.gov/dcp/occupational-and-professional-division/occupational--profess/careers-in-the-trades-license-types) |
| Roofing and siding | DCP | No separate state trade license; residential roofing and siding require HIC registration | [DCP home improvement](https://portal.ct.gov/dcp/license-services-division/all-license-applications/home-improvement-applications) |
| Fire sprinklers, elevators, glazing, pool building | DCP Occupational and Professional Licensing | Separate state trade licenses for each | [DCP trade license types](https://portal.ct.gov/dcp/occupational-and-professional-division/occupational--profess/careers-in-the-trades-license-types) |

_Checked 2026-10-19 on DCP license pages. Confirm the exact license class for your scope of work with DCP before you bid._

DCP says HIC registration covers anyone who contracts with a consumer for work on residential property. It doesn't cover your own home, subcontracted work, work under a trade license, commercial property, contracts under $200, routine property maintenance or new homes, which need the New Home Construction Contractor registration instead. An LLC must register as an LLC; an individual registration doesn't cover it. Towns still issue building permits. Read more in our [contractor license guide](https://www.brix.so/learn/contractor-license).

## How are Connecticut contractors taxed on income?

Owners of sole proprietorships, LLCs and S corporations report business profit on their Connecticut income tax return. The 2026 Form CT-1040ES rate table for single filers starts at **2.00%** on the first $10,000 of taxable income, steps through 4.5%, 5.5%, 6.0%, 6.5% and 6.9%, and reaches **6.99%** above $500,000.

- **Estimated payments:** DRS says you must make them if your Connecticut tax after withholding and any pass-through entity tax credit is $1,000 or more. 2026 installments are due April 15, June 15 and September 15, 2026, and January 15, 2027.
- **Pass-through entity (PE) tax:** DRS now says the PE Tax "is optional." Partnerships and S corporations that want it elect each year by checking the box on a timely filed CT-1065/CT-1120SI, and the election is irrevocable. Electing entities make estimates if the required annual payment is $1,000 or more.
- **Corporations and LLC filings:** C corporations file the corporation business tax with DRS, and entities file annual reports with the Secretary of the State. Check with each office for current amounts.

Plan your quarterly payments with [quarterly estimated taxes for contractors](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors) and the [quarterly estimated tax calculator](https://www.brix.so/tools/quarterly-estimated-tax-calculator).

## Who has to carry workers' comp in Connecticut?

The Workers' Compensation Commission says "all employers in the State of Connecticut are required to have workers' compensation insurance," with few exceptions. The owners are treated differently. A sole proprietor isn't covered unless they accept the Act's provisions. Partners, corporate officers and LLC members may elect to be excluded, using the Commission's coverage election forms (6B, 6B-1 and 75).

In practice: hire a helper and you need a policy. If you're a one-person LLC or corporation, decide on purpose whether to cover yourself, and keep the election form on file. The Commission notes insurers may charge fees for an uninsured contractor at audit, so collect certificates from your subs. See [workers' compensation basics](https://www.brix.so/learn/workers-compensation).

> **Confirm before you bill**
>
> Whether a job is taxable in Connecticut can turn on who owns the building and whether they live there. This summary of DRS, DCP and Commission guidance isn't tax or legal advice. Run your invoice setup past a Connecticut CPA, and ask DRS in writing about close calls.

Working near the borders? See our guides for [New York](https://www.brix.so/taxes/new-york), [Massachusetts](https://www.brix.so/taxes/massachusetts) and [Rhode Island](https://www.brix.so/taxes/rhode-island).

BRIX tracks sales tax on quotes and invoices, so a taxable commercial job and a nontaxable homeowner job each get billed the way you set them up, and it syncs with QuickBooks. It also tracks your DCP registration and trade licenses and flags renewals before they lapse. BRIX doesn't determine taxability, file returns or give tax advice.

- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.
- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Compliance and permit tracking](https://www.brix.so/#use-cases): Tracks licenses, safety documents and permits and flags renewals before they lapse.

## Frequently asked questions

### Is labor taxable in Connecticut?

It depends on the property. DRS says contractor labor is generally taxable on existing commercial, industrial and income-producing property at 6.35%. Labor on new construction and owner-occupied homes of one to three units isn't taxed, except for services DRS lists as taxable everywhere, like landscaping and maintenance.

### Do I charge sales tax on a kitchen remodel for a homeowner in Connecticut?

Usually not on the labor, if the owner lives in a home of one to three units. You still pay sales tax on the materials when you buy them. The same remodel in a rental property or office would be taxable.

### Can Connecticut contractors buy materials with a resale certificate?

Generally no. DRS treats contractors as the consumers of materials. The exceptions are contractors who run a building supply store or who sell specific materials to the owner with the charge, quantity and separate install price on the invoice, in which case they charge tax on those materials.

### Do I need a sales tax permit if all my work is residential?

Yes. DRS says building contractors and subcontractors must get a Sales and Use Tax Permit before providing any services, even if those services aren't taxable or the customer is exempt.

### Who needs a home improvement registration in Connecticut?

Anyone who contracts with a consumer for work on residential property, including roofing and siding, must register with the Department of Consumer Protection. The fee is $220 and you need at least $20,000 of general liability insurance. Contracts under $200, commercial work, trade-licensed work and new homes are excluded.

### Is the Connecticut pass-through entity tax still mandatory?

No. DRS now describes the PE Tax as optional. An eligible entity elects each year by checking the box on a timely filed Form CT-1065/CT-1120SI, and that election can't be revoked.

### Does an LLC owner need workers' comp in Connecticut?

LLC members may elect to be excluded from the Workers' Compensation Act, according to the Workers' Compensation Commission. Any employees must be covered, since all employers are required to carry insurance with few exceptions.

## Related

- [Do Contractors Charge Sales Tax on Labor or Materials?](https://www.brix.so/learn/sales-tax-on-labor-vs-materials)
- [What Is Use Tax for Contractors?](https://www.brix.so/learn/use-tax-for-contractors)
- [What Is a Contractor License?](https://www.brix.so/learn/contractor-license)
- [What Is Workers' Compensation Insurance?](https://www.brix.so/learn/workers-compensation)
- [Quarterly Estimated Taxes for Contractors: How They Work in 2026](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [New York Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/new-york)
- [Massachusetts Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/massachusetts)
- [Rhode Island Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/rhode-island)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [Connecticut Department of Revenue Services — Sales and Use Tax information](https://portal.ct.gov/drs/sales-tax/tax-information) (checked 2026-10-19)
- [Connecticut Department of Revenue Services — IP 2018(2), Building Contractors' Guide to Sales and Use Taxes](https://portal.ct.gov/-/media/drs/publications/pubsip/2018/ip-2018(2).pdf) (checked 2026-10-19)
- [Connecticut Department of Consumer Protection — Home improvement applications](https://portal.ct.gov/dcp/license-services-division/all-license-applications/home-improvement-applications) (checked 2026-10-19)
- [Connecticut Department of Consumer Protection — Home improvement contractor application](https://portal.ct.gov/dcp/license-services-division/all-license-applications/home-improvement-contractor-application) (checked 2026-10-19)
- [Connecticut Department of Consumer Protection — New home construction and home improvement renewal](https://portal.ct.gov/dcp/license-services-division/all-license-applications/new-home-construction-and-home-improvement-renewal) (checked 2026-10-19)
- [Connecticut Department of Consumer Protection — New home construction contractor applications](https://portal.ct.gov/dcp/license-services-division/all-license-applications/new-home-construction-contractor-applications) (checked 2026-10-19)
- [Connecticut Department of Consumer Protection — Careers in the trades: license types](https://portal.ct.gov/dcp/occupational-and-professional-division/occupational--profess/careers-in-the-trades-license-types) (checked 2026-10-19)
- [Connecticut Department of Revenue Services — Form CT-1040ES (2026)](https://portal.ct.gov/-/media/drs/forms/2025/income/ct1040es-flat0126.pdf) (checked 2026-10-19)
- [Connecticut Department of Revenue Services — Resident income tax information](https://portal.ct.gov/drs/individuals/resident-income-tax/tax-information) (checked 2026-10-19)
- [Connecticut Department of Revenue Services — Pass-Through Entity Tax information](https://portal.ct.gov/drs/taxes/pass-through-entity/tax-information) (checked 2026-10-19)
- [Connecticut Workers' Compensation Commission — Workers' compensation insurance](https://portal.ct.gov/wcc/knowledge-base/articles/employers/workers-compensation-insurance) (checked 2026-10-19)

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Written by BRIX Editorial Team. Last updated 2026-10-19. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/taxes/connecticut