The Tax Foundation put Connecticut near the bottom of its most recent State Tax Competitiveness Index—again.

The Tax Foundation ranked Connecticut 47 out of every state and Washington D.C. in overall Tax Competitiveness. This is the third year in a row that Connecticut has ranked 47 on this index.

“Connecticut’s tax code includes all major tax types, and the state has historically ranked among the bottom 10 on the Index,” the Tax Foundation’s summary of Connecticut’s system states.

The summary highlights the complexity of the state’s income tax, which ranked 46 out of the entire country.

“Connecticut has one of the most complex and least neutral individual income tax systems in the nation, featuring seven tax brackets with a top marginal rate of 6.99 percent and a recapture provision that eliminates the benefit of lower brackets, effectively taxing all income at the taxpayer’s highest marginal rate,” it states. “Additionally, tax brackets and the personal exemption are not adjusted for inflation.”

Researchers take corporate, sales, property, unemployment insurance, and individual income tax rates into account when coming up with the overall ranking.

Connecticut ranked in the bottom half of the country in almost all of the metrics measured by the Tax Foundation. The sole exception is the state’s sales tax. The Tax Foundation considers Connecticut’s sales tax to be the 19th-best in the country.

“The state’s sales tax rate of 6.35 percent is competitive both nationally and regionally, but the base includes some business inputs and excludes many final consumption goods and services, which limits the revenue-generating potential and reduces the neutrality of the sales tax system,” the summary states.

Connecticut was also ranked 49 for property taxes, beating out only Vermont.

A separate study from WalletHub that was published earlier this year found that Connecticut had the third-highest property tax rate out of any state in the country. However, the Tax Foundation doesn’t look at the tax rate alone.

“Connecticut… has one of the highest property tax burdens in the nation (relative to personal income) and imposes harmful estate and gift taxes, making the state less attractive to homeowners and high-net-worth individuals,” according to Connecticut’s summary.

Tax Foundation researchers projects that Connecticut will become a more competitive state in the future.

“Connecticut’s capital stock tax rate continued to drop in 2025, from 0.26 percent to 0.21 percent,” researchers state.

A capital stock tax, known as the capital base tax in Connecticut, is a tax on a business’s net worth. The state began phasing out this tax in 2020, and the process will be completed next year.  

“While this small reduction did not affect its property tax or overall rankings, the state will see more movement on next year’s Index when it phases out the tax completely in 2026,” the researchers predict.

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