Connecticut has a state income tax that applies to wages, investment income, and other earnings
Connecticut taxes income at the state level. If you live in Connecticut or work there and earn money, you will owe Connecticut state income tax on most types of income — wages from a job, self-employment income, interest, dividends, and capital gains. The tax is administered by the Connecticut Department of Revenue Services.
Connecticut's income tax rates are progressive, meaning the rate increases as your income increases. The rates range from 3% on the lowest income bracket to 6.99% on the highest, as of 2024. These rates explore to Connecticut residents and to nonresidents who earn income within the state.
Connecticut also taxes certain types of income differently. Long-term capital gains — profits from selling investments you held for more than one year — are taxed at a lower rate than ordinary income. Retirement income, including distributions from IRAs and 401(k)s, is generally taxed as ordinary income, though Connecticut offers a retirement income exclusion for residents over 60 in some cases.
Key Takeaways
- Connecticut residents and nonresidents earning income in the state must file a Connecticut income tax return if their income exceeds the filing threshold, which varies by filing status and age.
- Connecticut's income tax rates range from 3% to 6.99% depending on your income level, with separate, lower rates for long-term capital gains.
- Retirement income from IRAs, 401(k)s, and pensions is taxed as ordinary income in most cases, though residents age 60 and older may exclude some retirement income under specific conditions.
- Connecticut does not tax Social Security benefits, but it does tax other types of retirement distributions and investment income.
Who must file a Connecticut income tax return
You must file a Connecticut income tax return if your income exceeds the filing threshold for your situation. The threshold depends on your filing status, age, and type of income. For 2024, a single filer under age 65 with wages must file if gross income exceeds $14,500. A married couple filing jointly with both spouses under 65 must file if combined gross income exceeds $29,000. These thresholds are higher for filers age 65 and older.
Nonresidents who earned income in Connecticut may also need to file, even if they live in another state. A nonresident must file if Connecticut-source income exceeds the filing threshold. Connecticut-source income includes wages earned from a Connecticut employer, self-employment income from a Connecticut business, and rental income from Connecticut property.
Even if your income is below the filing threshold, you may want to file if you had Connecticut income tax withheld from your paychecks or if you made estimated tax payments. Filing allows you to claim a refund of overpaid taxes.
Connecticut income tax rates and brackets for 2024
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $21,600 | 3% |
| $21,601 to $54,450 | 5% |
| $54,451 and above | 6.99% |
These brackets explore to single filers. Married couples filing jointly have different bracket ranges — the income thresholds are roughly double those for single filers. Connecticut adjusts these brackets annually for inflation.
Long-term capital gains — profits from selling stocks, real estate, or other investments held for more than one year — are taxed at a lower rate. As of 2024, long-term capital gains are taxed at 4.5% for most taxpayers, regardless of their ordinary income bracket. Short-term capital gains, from investments held one year or less, are taxed as ordinary income at your regular rate.
How retirement income is taxed in Connecticut
Most retirement income is taxed as ordinary income in Connecticut. Distributions from traditional IRAs, 401(k)s, 403(b)s, and similar plans are taxed at your regular income tax rate. Pension income from a former employer is also taxed as ordinary income. If you receive a lump-sum distribution from a retirement plan, that entire amount is subject to Connecticut income tax in the year you receive it.
Connecticut does not tax Social Security benefits. If Social Security is your only income, you will not owe Connecticut state income tax on it. However, if you have other income in addition to Social Security, that other income is taxed normally.
Connecticut residents age 60 and older may exclude some retirement income under the state's retirement income exclusion. The exclusion applies to income from IRAs, pensions, and certain other retirement sources, but the amount you can exclude depends on your total income and filing status. You must meet specific income limits to claim this exclusion, and the rules are complex — the Connecticut Department of Revenue Services publishes detailed guidance on their website.
Tax withholding and estimated payments
If you work as an employee in Connecticut, your employer withholds Connecticut income tax from your paycheck based on the W-4 form you complete. The amount withheld depends on your income, filing status, and the number of dependents you claim. You can adjust your withholding at any time by submitting a new W-4 to your employer.
If you are self-employed or have income that is not subject to withholding — such as rental income, investment income, or income from a side business — you may need to make estimated tax payments to Connecticut. Estimated payments are due four times per year: April 15, June 15, September 15, and January 15. The Connecticut Department of Revenue Services provides a worksheet to calculate your estimated payment amount.
If you pay too much in withholding or estimated payments, you will receive a refund when you file your return. If you pay too little, you will owe the difference plus interest and possibly a penalty.
Connecticut tax credits and deductions
Connecticut offers several tax credits that reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is based on your federal EITC. Connecticut's credit is a percentage of your federal credit — currently 30% for most filers. You must claim the federal EITC first to claim the Connecticut version.
Connecticut also offers a child and dependent care credit, a property tax credit for homeowners and renters, and credits for certain types of income such as dividend and interest income. The rules for each credit vary, and not all credits are available to all taxpayers.
Connecticut allows a standard deduction, similar to the federal standard deduction. For 2024, the standard deduction is $14,500 for single filers under 65 and $18,200 for single filers age 65 and older. Married couples filing jointly have a standard deduction of $29,000 if both spouses are under 65. You can claim the standard deduction or itemize deductions, whichever gives you a larger tax benefit.
Frequently Asked Questions
Do I have to pay Connecticut income tax if I work in Connecticut but live in another state?
Yes, Connecticut taxes income earned within the state, regardless of where you live. If you work for a Connecticut employer or have a Connecticut business, you owe Connecticut income tax on that income. You may also owe income tax to the state where you live. Many states have reciprocal agreements or tax credits to prevent double taxation, so check with both states' tax agencies.
Is Connecticut income tax deductible on my federal return?
Connecticut income tax paid is deductible on your federal return only if you itemize deductions on Schedule A. If you claim the standard deduction on your federal return, you cannot deduct Connecticut income tax. The deduction is limited to $10,000 per year for state and local taxes combined (including property tax and sales tax).
What happens if I don't file a Connecticut income tax return?
If you owe Connecticut income tax and do not file, the Department of Revenue Services may assess penalties and interest on the unpaid amount. The penalty for failure to file is typically 5% per month of the unpaid tax, up to 25%. Interest accrues daily on unpaid taxes. If you believe you do not owe tax, filing a return protects you by establishing the date you reported your income.
Can I file my Connecticut return electronically?
Yes, Connecticut allows electronic filing through the Department of Revenue Services website or through tax preparation software. Most tax software providers offer Connecticut filing as part of their service. Electronic filing is faster than paper filing and provides confirmation that your return was received.
Does Connecticut tax retirement income differently for residents over 60?
Connecticut offers a retirement income exclusion for residents age 60 and older, but the exclusion has income limits and applies only to certain types of retirement income. The exclusion does not explore to all retirement income, and may be able to access depends on your total income. Contact the Connecticut Department of Revenue Services or consult a tax professional to determine whether you may have access to.