INCOME TAX

A tax is imposed on the Connecticut taxable income of resident individuals, trusts, and estates at a rate of 4.5%. Nonresidents and part-year resident individuals, trusts and estates are also subject to the tax on income derived from or connected with sources within the State. Connecticut taxable income is defined as adjusted gross income for federal tax purposes with certain modifications and exemptions described below.

1.6 million taxpayers/ Annually
Taxpayers who expect to owe more than $500 in income tax, in addition to income tax withheld, are required to file four estimated tax payments.

For taxable years commencing on or after January 1, 1999.

Exemptions

• $12,250 for unmarried individuals, for taxable years commencing on or after January 1, 2000, but prior to January 1, 2001. For taxpayers with Connecticut AGI in excess of $24,500, the exemption decreases by $1,000 for each $1,000 increase in Connecticut AGI. The exemption is phased out at $35,500.
• $12,000 for married persons filing separately. For taxpayers with Connecticut AGI in excess of $24,000, the exemption decreases by $1,000 for each $1,000 increase in Connecticut AGI. The exemption is phased out at $35,000.
• $19,000 for heads of household. For taxpayers with a Connecticut AGI in excess of $38,000, the exemption decreases by $1,000 for each additional $1,000 of Connecticut AGI. There is no exemption if the taxpayer earns more than $56,000.
• $24,000 for married persons filing jointly. The exemption for joint filers decreases by $1,000, for taxpayers whose Connecticut AGI exceeds $48,000, for each $1,000 increase in Connecticut AGI. The exemption is phased out at $71,000.
• Social Security benefits for single filers and married individuals filing separately whose federal adjusted gross income for the taxable year is less than $50,000. Social Security benefits for married individuals filing jointly and head of household filers whose federal adjusted gross income for the taxable year is less than $60,000. Applicable to taxable years commencing on or after January 1, 1999.

• Interest on state and local obligations other than Connecticut;
• Exempt-interest dividends (other than those derived from obligations of the State of Connecticut or its municipalities);
• Pro rata share of certain S Corporation shareholder's loss;
• The total taxable amount of a lump sum distribution for the taxable year deductible from gross income in calculating federal adjusted gross income; and
• Loss on sale of Connecticut bonds.

• Interest on U.S. obligations;
• Dividends from certain mutual funds consisting of U.S. obligations;
• Social Security Benefit Adjustment;
• Refunds on state and local income taxes;
• Tier 1 and Tier 2 railroad retirement benefits and supplemental annuities;
• Pro rata share of certain S Corporation shareholder's income; and
• Gain on sale of Connecticut bonds.

Connecticut requires anyone who maintains an office or transacts business in Connecticut, and who is considered an employer for federal income tax withholding purposes, to withhold Connecticut income tax whether or not the payroll department is located in Connecticut.

Taxpayers must make estimated payments if their Connecticut income tax (after tax credits) minus Connecticut tax withheld is more than $500, and you expect your Connecticut income tax withheld to be less than your required annual payment.

Taxpayers who are subject to, and required to pay, the federal alternative minimum tax are subject to the Connecticut Alternative Minimum Tax. The alternative minimum tax is computed on the lesser of 19% of the adjusted federal tentative minimum tax, or 5% of adjusted federal alternative minimum taxable income. The Connecticut Alternative Minimum Tax has been in effect since the 1993 income year.

Connecticut residents are eligible for an income tax credit for property taxes paid to a Connecticut political subdivision on a primary residence and/or privately owned or leased motor vehicle. The maximum credit for taxable years commencing on or after January 1, 1999 is $425 per return. The maximum credit for taxable years commencing on or after January 1, 2000 is $500 per return. The credit cannot exceed the amount of qualifying property taxes paid or income tax liability. If an individual paid more than $100 in property tax, a limitation based on filing status and Connecticut Adjusted Gross Income may apply.

Connecticut residents may claim an income tax credit if any part of their income was taxed by a qualifying jurisdiction. A qualifying jurisdiction includes another state of the United States, a local government within another state or the District of Columbia. A qualifying jurisdiction does not include the State of Connecticut, the United States or a foreign country or its provinces.

SALES AND USE TAXES

Connecticut levies sales and use taxes on the gross receipts of retailers from the sale of tangible personal property at retail, from the rental or leasing of tangible personal property, and on the gross receipts from the rendering of certain business services.

Basis and Rate

6%  non the gross receipts from the sale, rental or leasing of tangible personal property, and the rendering of certain business services (general rate);

5.75%  on patient care services by hospitals;

4.5%  on the sale of a motor vehicle to a nonresident member of the United States armed forces serving on active duty in Connecticut;

4%   on certain renovation and repair services to residential property. The tax on these services is being phased out and is reduced from 4% to 2% on July 1, 2000;

3%   on computer and data processing services. The tax on these services is being phased out and is reduced from 3% to 2% on July 1, 2000; and

12%   on the rental of rooms in a hotel or lodging house.

Exemptions

Conn. Gen. Stat. §12-412 provides for various exemptions from the sales and use taxes for the sale of, storage, use or other consumption of numerous goods and services.

The table that follows provides a summary of the major exemptions claimed by businesses during Fiscal Year 1999-00, and the amount of revenue forgone for each exemption monitored. Note that the revenue forgone for each item is computed at the 6% rate.

*For Utility and Heating Companies Only

Number of Taxpayers/Filing Frequency

189,375 Taxpayers

Comparative Data

Table I provides a summary of all gross receipts reported under the sales and use taxes attributable to various components.  Note that the figures are gross, and do not necessarily represent taxable receipts.

Table I
(In Millions)

Table II, provides a summary of retail sales for the State of Connecticut for the past three fiscal years.  The figures reflect fluctuations in sales of durable and non-durable goods.  Durable goods are usually more expensive items expected to last more than three years, such as automobiles and large household appliances.  These sales are provided by selected major groups within the Standard Industrial Classification (SIC) system.  Approximately half of all the sales and use tax revenue is generated by the retail trade sector.

TABLE II:  Retail Sales Volume - Fiscal Years 1998-2000
(In Millions)

Table II provides total sales and use taxes revenues of the Standard Industrial Classification (SIC) major industrial categories for fiscal years 1998 through 2000.  The revenues are from regular payments and represent 94% of the total sales and use taxes collected in FY 1999-00.  The figures do no include any audit or late return payments.

TABLE III: Sales and Use Tax - From Regular Payments
Fiscal Years 1998-2000
(In Millions)

CORPORATION BUSINESS TAX

A corporation carrying on or doing business in Connecticut is subject to the Corporation Business Tax. Most corporations in Connecticut must file returns and pay corporation business tax although some corporations are exempt.

Corporations must calculate their tax under two alternative methods and remit the higher tax. If a corporation owes less than $250 under both methods, it pays the minimum tax of $250.

Basis and Rate

Net Income Base Method

The method under which the majority of Corporation Business Tax revenue is derived is the Net Income Base. Corporations compute their Connecticut Net Income by applying the adjustments allowed or required by Connecticut law to the federal taxable income of the corporation. Additions to the base include interest income wholly exempt from federal tax and unallowable deductions for corporation or franchise taxes paid to other states. Deductions from the federal base include 70% of the dividends received from domestic corporations in which ownership is less than 20% and capital loss carryover, if not deducted in computing federal capital gain.

Connecticut uses an apportionment method to determine the portion of income taxable in the state. This method isolates what percentage of a corporation's economic activity takes place in Connecticut. Three factors - sales, payroll and property compare Connecticut to the nation to arrive at this percentage. The sales factor is double weighted.

Special single-factor apportionment rules are currently provided for financial service companies. For income years beginning on or after January 1, 2001, manufacturers will also apportion income using a single-factor formula. Broadcasters will be allowed a single factor formula for income years beginning on or after October 1, 2001.

Connecticut Net Income is taxed at the rate of 7.5%.

Capital Base Method

The second and alternate method corporations must compute their tax under is the Capital Base. The capital base is the total value of the average capital stock, surplus and undivided profits, and surplus reserves, less the average values of deficits and stockholdings in private corporations. Multistate corporations multiply their capital base by an apportionment fraction.

The capital base is taxed at a rate of 3.1 mils ($0.0031) per dollar. Financial service companies are excluded from the capital base and minimum tax. Under the capital base method, a corporation is limited to a maximum tax of $1,000,000.

Minimum Tax

If a corporation's calculation of the tax is less than $250 under both of the two previous methods, it pays a minimum tax, which is currently $250. The majority of corporations pay the minimum tax.

Subchapter S Corporations

Conn. Gen. Stat. §12-217(c)(2) phases out the Corporation Business Tax on the net income of Subchapter S corporations by reducing the percentage of an S corporation's net income subject to tax until it is exempt in the 2001 income year. These percentages are shown below.

Subchapter S corporations will continue to be subject to the tax under the capital and minimum tax bases until the 2001 income year. These companies are allowed credits to the extent and in the same percentage that their income is subject to the net income base. Exceptions to this rule allow Subchapter S corporations to claim the entire amount of their available Neighborhood Assistance Act and Housing Program Contribution credits.

Combined Returns/Preference Tax

If a corporation is permitted to file a federal consolidated return, it may file a combined return in Connecticut. Filing a combined return allows a group of corporations engaged in business in Connecticut to file jointly. Their combined Connecticut tax liability is determined after each corporation individually apportions its income to Connecticut.

A preference tax is imposed on corporations filing a combined return. These corporations are not entitled to the first $25,000 of tax savings over what they would pay if they file separately. Combined filers must determine the total tax due as if they were filing separately. The difference, up to $25,000, between this amount and the total combined tax is the preference tax and must be added to the total combined tax.

The total amount due for 1998 combined filers had they filed separate single returns would have been $429.1M. The preference tax due by these filers was $9.4M. The total tax due by combined filers was $236.8M, including the $9.4M in preference tax.

Filing Frequency

Annually with four estimated installments.

Number of Taxpayers

1998 Corporation Business Tax Returns

CORPORATION BUSINESS TAX CREDITS

The State of Connecticut offers many Corporation Business Tax credits which a corporation may take advantage of to reduce its liability to the state.

Apprenticeship Training
Reference: Conn. Gen. Stat. §12-217g

A corporation that hires apprentices in the manufacturing or plastics trades may apply for a credit of up to $4,800 per apprenticeship. The amount of the credit is limited to the lesser of 50% of the actual wages paid or the total number of work hours during the year multiplied by $4.00, or $4,800, whichever is less.

Corporations that hire apprentices in the construction trades may apply for a credit of up to $1,000 per apprenticeship. The amount of the credit is limited to the lesser of 50% of the actual wages paid or $1,000, or the total number of work hours during the year multiplied by $2.00, whichever is least.

Clean Alternative Fuels
Reference: Conn. Gen. Stat. §12-217i

The Clean Alternative Fuels credit enables a business to claim credits of 10% or 50% of its expenditures on vehicles, equipment and filling stations which enable use of clean alternative fuel. Unused credit may be carried forward for three years.

A 10% credit is allowed for the incremental cost of purchasing vehicles exclusively powered by clean alternative fuels.

A 50% credit is available for the expenses of equipment used in a compressed natural gas, liquefied petroleum gas or liquefied natural gas filling or electric recharging station and the purchase of equipment needed to convert a vehicle to clean alternative fuel. The credit also applies to amounts spent directly on the construction of any filling station or improvements to any existing filling station in order to provide either compressed natural gas, liquefied petroleum gas or liquefied natural gas.

Computer Donation
Reference: Public Act 00-170

For income years beginning on or after January 1, 2000, a new corporation business tax credit is available for the donation of new or used computers to a local or regional board of education or a public school. The amount of the credit shall not exceed 50% of the fair market value at the time of donation.

The amount of credit granted to any business firm cannot exceed $75,000 annually. The total amount of credits allowed in any fiscal year is capped at $1 million.

Displaced Workers Hired By Electric Suppliers
Reference: Conn. Gen.Stat. §12-217bb

Electric suppliers who hire workers displaced by the restructuring of the electric industry may claim a credit of $1,500 for each displaced worker employed at least 6 months. The credit is effective for income years beginning on or after January 1, 1999.

Donation of Open Space Land
Reference: Public Act 99-173

For income years beginning on or after January 1, 1999 this new credit is available equal to 50% of the use value of the donation of land to be permanently preserved as protected open space. Donations of land must be made to the state, a political subdivision of the state, or a nonprofit land conservation organization and may include any discount in the sales price.

Electronic Data Processing Equipment
Reference: Conn. Gen. Stat. §12-217t

The Electronic Data Processing Equipment Property Tax credit provides a 100% credit for property tax owed and paid on electronic data processing equipment. Unused credits may be carried forward for five succeeding income years.

Employer Assisted Housing
Reference: Conn. Gen. Stat. §12-217p

This credit is available for monies paid to a revolving loan fund for employer assisted housing. This fund must be established and maintained by the corporation for 5 years and provide revolving loans to its low and moderate income employees. The program is administered by the Connecticut Housing Finance Authority and is capped at $1 million per year. The credit is limited to $100,000 annually per business firm and may be carried back or forward for five years.

Enterprise Zone or Entertainment District
Reference: Conn. Gen. Stat. §12-217e as amended by P.A. 00-174

The Enterprise Zone or Entertainment District Credit allows a business credit of 50% of their allocable tax for operating a manufacturing facility which meets certain employment criteria and is located within a designated enterprise zone or other area designated as having enterprise zone level benefits. Certification is required from the Department of Economic and Community Development. Corporations may claim this credit for 10 years beginning with the first year following the year of certification.

Enterprise Zone Credit For Qualifying Corporations
Reference: Conn. Gen. Stat. §12-217v

A credit of 100% is allowed to any qualifying corporation created on or after January 1, 1997 which hires local employees qualifying under the Job Training Partnership Act to work within a designated Enterprise Zone. This credit is 100% of the corporation's tax liability for it's first three years and 50% of its liability for the next seven.

Financial Institutions
Reference: Conn. Gen. Stat. §12-217u

This credit is available to financial institutions which construct a new facility and create a minimum of 1,200 new jobs. Each company must obtain an eligibility certificate from the Department of Economic and Community Development in order to claim this credit. Credit levels of 30%, 40% or 50% for years one through ten and 25% for years eleven through fifteen, are based on the number of qualified employees. This credit may be taken for up to fifteen years.

Fixed Capital Investments
Reference: Conn. Gen. Stat. §12-217w

This credit is available to corporations for income years beginning on or after January 1, 1998. The credit is based on the amounts paid or incurred for any new tangible personal property that has a class life of more than four years, is not sold or leased within 12 months, and will be held and used in Connecticut for at least five years. Inventory, land, buildings and mobile transportation equipment are not included. The percentage of credit beginning January 1, 1998 is 3% of the expenditures in 1998, 4% in 1999, and 5% for income years beginning on or after January 1, 2000. Unused credits may be carried forward for five succeeding income years.

Hiring Incentive
Reference: Conn. Gen. Stat. §12-217y as amended by P.A. 99-203 and P.A. 00-174

This credit is available to companies that hire recipients of the Temporary Family Assistance (TFA) program. The employees must have been receiving TFA benefits for at least 9 months and have worked at least 30 hours per week to qualify. A corporation may claim a credit of $125 for each full month that the worker is employed. Unused credits may be carried forward for five succeeding income years.

Historic Homes Rehabilitation
Reference: Public Act 99-173

This new credit will be allowed for income years beginning on or after January 1, 2000. The Connecticut Historical Commission may allocate up to $3 million in credit vouchers during any fiscal year. Owners of historic homes must incur qualified rehabilitation expenditures that exceed $25,000 in order to qualify. After the work is performed and verified, a tax credit is allowed for 30% of the qualified rehabilitation expenditures. The credit is limited to $30,000 per dwelling. Unused credits may be carried forward for four succeeding income years.

Housing Program Contribution
Reference: Conn. Gen. Stat. §8-395 as amended by P.A. 99-173

This tax credit program enables corporations to contribute to housing programs which benefit low and moderate income individuals and families. These programs are sponsored, developed or managed by nonprofit corporations and must be approved by the Connecticut Housing Finance Authority. The credit is the amount of the contribution, not to exceed $75,000 per business. Unused credits may be carried back to the five preceding income years and forward for five succeeding income years.

Human Capital Investments
Reference: Conn. Gen. Stat. §12-217x

The Human Capital Investments credit is available for income years beginning on or after January 1, 1998. The credit is based on the amounts paid or incurred for various job training and work education programs, child care subsidies to Connecticut employees, day care facility establishment costs and donations to institutions of higher education for improvements to technology. The percentage of credit beginning January 1, 1998 is 3% of the expenditures in 1998, 4% in 1999, and 5% for income years beginning on or after January 1, 2000. Unused credits may be carried forward for five succeeding income years.

Insurance Reinvestment Fund
Reference: Conn. Gen. Stat. §38a-88a as amended by P.A. 00-170

A credit may be applied against the corporation business tax for investments made through a registered fund manager.  These investments must be specifically earmarked for insurance businesses incorporated in Connecticut that occupy new facilities and create new jobs.  The credit is 10%  of amounts invested in qualified insurance businesses, beginning 3 years but not later than 7 years from the date of investment.  For years 7 through 10, the credit increases to 20% of the invested amounts.  Unused credits may be carried forward for five succeeding income years or assigned to another taxpayer.

Managers of eligible funds must have registered with the Commissioner of Economic and Community Development by July 1, 2000 in order for their investors to be able to claim this credit.  No further credits will be allowed for investments in funds created on or after July 1, 2000.

Machinery and Equipment
Reference: Conn. Gen. Stat. §12-217o as amended by P.A. 99-121

This credit is based upon the incremental increase in expenditures for machinery and equipment acquired for and installed in Connecticut. The rate of credit is either 5% or 10% depending on the number of full time employees in Connecticut. The credit became effective for income years commencing on or after January 1, 1997, however certain expenditures made during 1995 may qualify for credit in the 1997 income year.

Manufacturing Facility in a Targeted Investment Community
Reference: Conn. Gen. Stat. §12-217e

A credit of 25% may be applied against the portion of the Corporation Business tax allocable to a manufacturing facility located in a targeted investment community. The Commissioner of Economic and Community Development must certify that the facility is operating in a designated area of high unemployment. The credit period lasts for ten years beginning with the first year following certification.

Neighborhood Assistance Act Program
Reference: Chapter 228a of the Conn. Gen. Stat. as amended by P.A. 99-83 and P.A. 99-235

The Connecticut Neighborhood Assistance Act tax credit program is designed to provide funding for municipal and non-profit organizations.

Businesses are granted a tax credit for contributing to certain programs approved by the Department of Revenue Services. Depending upon the nature of the program and the individuals served, credit is either 60% or 40% of the amount contributed. Unused credits may be carried back to the two preceding income years.

The program has several statutory limits that must be followed. A business is limited to receiving $75,000 in tax credit annually. A non-profit organization is limited to receiving $150,000 in contributions in the aggregate. Also, a businesses' total charitable contributions must equal or exceed it's prior year amount. The minimum contribution on which credit can be granted is $250. The program has a $5M cap which if exceeded, results in proration of approved donations.

Research and Experimental Expenditures
Reference: Conn. Gen. Stat. §12-217j as amended by P.A. 99-173

This is a tax credit based on the incremental increase in expenditures for research and experiments conducted in Connecticut. The amount of the credit equals 20% of the amount spent by the corporation directly on research and experimental expenditures which exceeds the amount spent in the preceding income year. Qualifying biotechnology companies are allowed a fifteen year credit carryforward. All other companies are allowed a fifteen year credit carryforward commencing with the 2000 income year.

For income years beginning on or after January 1, 2000, Public Act 99-173 allows qualified small businesses to exchange unused amounts of this credit with the state for a cash payment of 65% of the value of the credit or carry these amounts forward at full value.

Research and Development Expenses
Reference: Conn. Gen. Stat. §12-217n as amended by P.A. 99-173

A credit may be applied against the Corporation Business Tax for expenses of research and development conducted in Connecticut.

The amount allowed as credit increases ratably from 1% of the annual research and development expenses paid or incurred, where such expenses equal $50 million or less, to 6% where expenses exceed $200 million. Also, for those taxpayers whose research and development expenses exceed $200 million, there is a credit reduction provision based on workforce reductions. Unused credits may be carried forward until fully taken.  The 6% credit is extended to qualified small businesses with a gross income which does not exceed $100 million for income years beginning on or after January 1, 2000.

For income years beginning on or after January 1, 2000, Public Act 99-173 allows qualified small businesses to exchange unused amounts of this credit with the state for a cash payment of 65% of the value of the credit or carry these amounts forward at full value.

Research and Development Grants to Institutions of Higher Education
Reference: Conn. Gen. Stat. §12-217l

This credit is available for 25% of the incremental increase in amounts spent by a corporation for a qualifying grant or combination of grants to any institution of higher education in Connecticut for the purposes of research and development related to advancements in technology.

Service Facility
Reference: Conn. Gen. Stat. §12-217e

This credit is available to companies with a service facility located in a Connecticut targeted investment community which hire new employees and have an eligibility certificate issued by the Commissioner of Economic and Community Development. The credit is based on the portion of tax allocable to such facility and the number of new employees working there. Credit percentages range from 15% to 50% depending on the number of new employees. The credit period is ten years.

Small Business Guaranty Fee
Reference: Public Act 99-173

This new credit is available for income years beginning on or after January 1, 1999. Small businesses with less than $5 million in gross receipts may claim this credit equal to the amount paid to the federal Small Business Administration as a guaranty fee to obtain guaranteed financing during the income year. Unused credits may be carried forward for four succeeding income years.

Traffic Reduction Programs
Reference: Conn. Gen. Stat. §12-217s

This credit is available for corporations employing 100 or more people. This is a 50% credit for traffic reduction program expenses related to the attainment of federal Clean Air Act standards, not to exceed $250 per participating employee. Expenditures made on or after January 1, 1995 were allowed to be claimed in 1997.

Urban or Industrial Site Investment
Reference:  P.A. 00-170

This credit is available for income years beginning on or after July 1, 2000 for investments in eligible urban reinvestment projects and industrial site investment projects.  Investments may be made directly or through a registered fund manager and must be certified by the Commissioner of Economic and Community Development.  The credit is 10% of the qualified investments, beginning 4 years but not later than 7 years from the date of investment.  For years 8 through 10, the credit increases to 20% of the invested amounts.  Unused credits may be carried forward for five succeeding income years or assigned to another taxpayer. 

The table below shows the number of corporation tax credits claimed and the amounts taken for each of the corporation credit programs utilized by businesses. The figures represent credit claimed on 1998 returns and reflect any credits carried forward from prior years and used in 1998.

• under $1;
• of a non-profit organization;
• to motion pictures not more than $5.00;
• to live performances at non-profit theaters or playhouses, Gateway Candlewood Playhouse, and Ocean Beach Park;
• to sporting or athletic activities in which patrons participate;
• to any carnival or to any amusement ride;
• to cabarets;
• to home games of the:
  • New Britain Rock Cats,
  • New Haven Ravens, and
  • Waterbury Spirit;
• to any event at the:
  • Hartford Civic Center,
  • New Haven Coliseum,
  • Connecticut Exposition Center,
  • New Britain Beehive Stadium,
  • New Britain Stadium,
  • New Britain Veterans Memorial Stadium,
  • Bridgeport Harbor Yard Stadium,
  • Stafford Motor Speedway,
  • Lime Rock Park,
  • Thompson Speedway,
  • Waterford Speedbowl,
  • the Tennis Foundation of Connecticut or any successor organization, and
  • William A. O'Neill Convocation Center.

• Annual dues under $100;
• Lawn Bowling Clubs;
• Locker Rental Fees (effective October 1, 2000); 
• Additional charges used to acquire open space land;
• Dues of a charitable, religious, governmental or non-profit educational institution; and
• Dues of any society, order or association operating under the lodge system or local fraternal organizations among students of a college or university.

Number of Taxpayers / Filing FrequencyAdmissions 190 taxpayers / Monthly
Dues 179 taxpayers / MonthlyBasis and Rate

Admissions  8% on the admissions charge to motion pictures shows, effective July 1, 2000.  On July 1, 2001 the rate will be reduced to 6%.10% on the admission charge to any other place of amusement, entertainment or recreation.Dues 10% on membership dues or initiation fees to any social, athletic or sporting club organization.Comparative Data

$9,940,929

ALCOHOLIC BEVERAGES TAX

A tax is imposed on all distributors of alcoholic beverages on the sale of alcoholic beverages within Connecticut. Distributors must report the total number of gallons of each alcoholic beverage sold during the month, the opening and closing inventories and the amount of tax due. Sales of alcoholic beverages are also subject to the Sales and Use Tax.

Sales of malt beverages which are consumed on the premises of an establishment covered by a manufacturer’s permit.

85 distributors/ Monthly

Basis and Rate

CIGARETTE TAX

An excise tax is imposed on all cigarettes sold in Connecticut. Payment is indicated by affixing stamps or heat applied decals to each pack of cigarettes. The stamps are sold to licensed dealers and licensed distributors. Sales of cigarettes are also subject to the Sales and Use Tax.

Exemptions

• Sales or purchases at military bases; and
• Cigarettes sold to any state institution other than a correctional institution.

Number of Taxpayers/ Filing Frequency67 taxpayers/ MonthlyBasis and Rate

25 mills per cigarette, or 50¢ per pack of twenty.