Here’s Why Your Morning Coffee Now Costs More In CT

HARTFORD, CT — You may have noticed that your morning coffee and doughnuts cost a few cents more recently. That’s because the state’s new additional one percent tax on prepared meals went into effect Oct. 1.

The difference may be less noticeable on things like a meal at a restaurant, but for life’s constants like the price of a coffee it could mean digging around your pocket for a few more pennies or perhaps a nickel. Those extra cents will add up to an estimated $65.3 million in the first full fiscal year the tax is in effect.

Many restaurants have posted signs notifying their customers about the change.

The array of what falls under a prepared meals tax has shifted a few times over the past few decades. The 1989 state budget expanded the sales tax and eliminated the exemption for meals under $2, according to the Republican-American.

Things got quite confusing in the weeks leading up to Oct. 1 after the state Department of Revenue Services issued a policy statement listing some of the items that would fall under the tax. It included items that had never before been taxed at grocery stores, such as small bags of salad, meal replacement bars and less than half a dozen loose cookies.

Legislative Republicans brought up the policy statement and criticized the law. They called for a special session to vote on the matter again. They also asked the Office of Fiscal Analysis to perform a new analysis of how much money the expanded taxable list would bring in for the state. OFA determined it would result in 40 percent more revenue than its original projection.

Gov. Ned Lamont and legislative Democratic leaders called on DRS to revise its policy to be more in line with the intent of the law. In the end, DRS did just that.

The prepared meals tax is just one of the laws that went into effect recently that squeezes more tax revenue out of purchases. Digital purchases such as Spotify or Netflix subscription will be subject to the 6.35 percent sales tax instead of the previous one percent tax. Taxes on e-cigarettes, short-term rentals, alcohol and car trade-ins also went up.

Single-use plastic bags now cost 10 cents at stores, but many stores have opted to not stock bags or to only stock thicker bags that are meant to be reused. Single-use bags will eventually be banned throughout the state.

Earlier in the year Lamont put forth a budget proposal that would’ve taxed services at the same rate as goods, but the proposal was substantially pared down.