Connecticut LLC Taxes — Step 8 of 8
The final step: understanding what you'll actually owe. As a default pass-through LLC, your profit flows to your personal return — taxed federally, hit with self-employment tax, and then Connecticut's graduated rate on top. Here's the full picture, with an estimator.
By default, a Connecticut LLC is a pass-through entity — profits flow to your personal 1040, taxed at federal rates plus 15.3% self-employment tax (Social Security + Medicare). Connecticut then applies its graduated rate (2%–6.99% across seven brackets) starting from your federal AGI — Connecticut has no separate state standard deduction. Multi-member LLCs can also elect the Pass-Through Entity Tax as a SALT-cap workaround. This is entirely separate from the $80 Annual Report (Step 6) and any sales tax (Step 7).
- Default tax status
- Pass-through
- SE tax rate
- 15.3%
- CT state tax
- Graduated, 2%–6.99%
- CT tax base
- Federal AGI
- CT standard deduction
- None
- Pass-Through Entity Tax
- Elective, 6.99%
- Previous step
- ← Step 7
How a Connecticut LLC Is Taxed by Default
An LLC itself pays no federal income tax — it's a "pass-through" entity by default. Profits flow to the owners' personal returns, where multiple layers of tax apply:
- Single-member LLCs report profit on Schedule C, attached to the owner's personal Form 1040.
- Multi-member LLCs file Form 1065 (informational) and issue each owner a Schedule K-1 showing their share of profit.
- Self-employment tax (15.3%) applies to net profit — this covers Social Security and Medicare, since there's no employer withholding it for you.
- Federal income tax applies via the standard progressive brackets, after the QBI deduction and standard deduction.
- Connecticut's graduated tax then applies on top, starting from your federal AGI — Connecticut has no state standard deduction, so the federal deduction and QBI benefit don't carry over to your Connecticut return.
Federal + Connecticut Tax Estimator
Enter your expected net profit to estimate total federal + Connecticut tax as a default pass-through LLC:
Estimate only, assumes federal standard deduction (no itemizing), the simplified 20% federal QBI deduction, and half of SE tax deducted above the line. Connecticut's own calculation excludes the federal standard deduction and QBI, per Connecticut's federal-AGI-based methodology, and excludes the small phasing-out personal exemption credit for simplicity. Doesn't include the $80 Annual Report, sales tax, or the elective Pass-Through Entity Tax. Not tax advice — consult a CPA for your specific situation.
The Pass-Through Entity Tax (Elective)
Connecticut offers an elective Pass-Through Entity Tax (PET) that multi-member LLCs and S-corps can use as a workaround for the federal $10,000 SALT deduction cap. The entity pays Connecticut tax at the 6.99% rate directly, which is then deductible as a business expense on the federal return — bypassing the SALT cap that would otherwise limit an individual's deduction. Members receive an offsetting credit on their personal Connecticut returns. The election must be made annually and requires careful coordination with a CPA, since the tax base and credit mechanics are more complex than a standard personal return.
The S-Corp Election Option
Once your LLC's profit grows substantially, electing S-corp tax status (via Form 2553) can reduce your self-employment tax burden — you pay yourself a reasonable salary (subject to payroll tax) and take remaining profit as a distribution (not subject to SE tax). This adds payroll complexity and cost, so it typically only makes sense once net profit clears roughly $60,000–$80,000/year. Connecticut's graduated rate applies the same way regardless of your federal entity election, though S-corps can also elect into the Pass-Through Entity Tax described above.
Connecticut's income tax is separate from everything else in this guideThe graduated income tax has nothing to do with the $80 Annual Report (Step 6), which is a flat filing fee regardless of profit, or sales tax (Step 7), which only applies if you sell taxable goods. Budget for all three separately — they don't offset each other.
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Connecticut LLC Taxes — FAQ
Ahmad Adil is the founder and CEO of LLC School. The tax figures here — the 15.3% self-employment rate, Connecticut's seven-bracket graduated rate on federal AGI, and the elective Pass-Through Entity Tax — reflect current IRS and Connecticut Department of Revenue Services guidance. This is educational information, not tax advice; consult a CPA for your specific situation.
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From naming your LLC to understanding your tax bill, you now have everything you need to form and run a Connecticut LLC with confidence. Bookmark this guide — you'll likely come back to it as your business grows.