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Business Use: Electronically accessed or transferred canned or prewritten software, and any additional content related to such software, that is sold to a business for use by the business remains taxable at the 1% rate as computer and data processing services.
Connecticut advises that software delivered electronically and data processing services are taxable. This includes software offered through a subscription service. SaaS falls within computer and data processing services, which is taxable at a reduced rate.
Higher tax rate on digital goods and services. Categorized as computer and data processing services, digital goods and services are currently subject to a 1 percent sales and use tax rate. As of October 1, 2019, the full Connecticut state sales tax rate of 6.35 percent will apply.
Sales of canned software - delivered on tangible media are subject to sales tax in Connecticut. In the state of Connecticut, so long as no tangible personal property was delivered to the buyer in addition to downloaded software, the software will be taxed at 1% rate applicable to computer and data processing services.
Several exemptions are certain types of safety gear, some types of groceries, certain types of clothing, children's car seats, children's bicycle helmets, college textbooks, compact fluorescent light bulbs, most types of medical equipment, and certain motor vehicles.
Canned or prewritten computer software is tangible personal property. The sale, leasing, or licensing of the software (including upgrades) is taxable at 6%.
Generally speaking, access to informational databases are non-taxable in most states either because they are not included in the definition of tangible personal property, or they are not specially identified as taxable services in presumably non-taxable service states, or in a few cases they are specially made exempt
The majority of states which have addressed the issue and have concluded that software (at least unbundled software) is not tangible personal property for ad valorem tax purposes and therefore is generally not taxable.
Maintenance of computer software is a computer and data processing service taxable at the 1% rate, whether the software is prewritten or custom.
The use tax rate for taxable goods and services is 6%. However, the tax on computer and data processing services is 1%. Examples of taxable tangible personal property include equipment, machines, furniture, appliances, computers, computer software, office supplies, and books.