Connecticut Business Entity Tax (BET) for LLCs

The Business Entity Tax (BET) is a separate Connecticut tax based on gross receipts — not profits. It applies to businesses (including LLCs) with Connecticut gross receipts exceeding $200,000. The rate is 0.75% on modified gross receipts. For the full tax picture, see our tax guide. For formation, see our LLC guide.

BET Overview

What Are "Modified Gross Receipts"?

Modified gross receipts include:

• Gross income from all Connecticut business activities
• Less: returns, allowances, and certain exclusions
• Does not subtract cost of goods sold or business expenses (it's a gross receipts tax, not an income tax)

How the BET Credit Works

The BET operates as a minimum tax:

• Calculate your BET (0.75% of modified gross receipts over $200K)
• Calculate your regular CT income tax
• If income tax exceeds BET: pay income tax only (BET is fully credited)
• If BET exceeds income tax: pay the BET amount (difference becomes your minimum tax)

Practical effect: Profitable businesses with margins over ~11% will typically owe more in income tax than BET, so the BET becomes irrelevant. Low-margin, high-revenue businesses may owe BET as their minimum.

Who Is Most Affected

• Low-margin businesses: Retailers, distributors, food service with high revenue but thin margins
• Early-stage companies: Revenue over $200K but still operating at a loss (BET still applies)
• Service businesses with high billings: Even if reinvesting heavily, BET applies to gross receipts

BET Calculation Example

LLC with $500,000 in CT gross receipts and $50,000 net income:

• BET: 0.75% x $500,000 = $3,750
• CT income tax (member): approximately $3,000 (on $50K at ~6%)
• Since BET > income tax: member owes $3,750
• The $750 difference ($3,750 - $3,000) is additional tax owed because of BET

LLC with $500,000 in CT gross receipts and $100,000 net income:

• BET: 0.75% x $500,000 = $3,750
• CT income tax (member): approximately $6,000 (on $100K)
• Since income tax > BET: member owes $6,000 (BET fully credited)
• BET has no additional impact

FAQ

Does the BET apply to single-member LLCs?

Yes. The BET applies to all business entities with CT gross receipts over $200,000, regardless of member count or federal tax classification.

Is the BET in addition to income tax?

Not exactly — it's a minimum. If your income tax exceeds the BET, you only pay income tax. The BET only costs you additional money when it exceeds what you'd owe in income tax alone.

Can I avoid the BET?

Only by keeping CT gross receipts under $200,000. There are no exemptions or deductions that reduce the BET calculation (it's based on gross receipts, not net income). The BET is one reason Connecticut is less favorable for high-revenue, low-margin businesses compared to states without gross receipts taxes.