Connecticut has a state income tax

Connecticut taxes wage income, investment income, and retirement income. The state does not tax Social Security benefits, but it does tax most other forms of income that residents earn. The tax rate varies depending on your income level and the type of income — wages are taxed differently than capital gains or dividends.

If you work in Connecticut or live there, you will file a Connecticut income tax return with the Department of Revenue Services. The filing deadline matches the federal deadline: April 15 of the following year, or the next business day if that falls on a weekend or holiday.

Key Takeaways

  • Connecticut taxes wage income at rates ranging from 3% to 6.99%, depending on your total income.
  • Social Security benefits are not taxed by Connecticut, but pensions, 401(k) withdrawals, and investment income are taxed.
  • You file your state return using Form CT-1040 or Form CT-1040NR if you are a nonresident, and the deadline is the same as your federal return.
  • If you live in Connecticut but work in another state, you may owe tax to both states, though Connecticut offers a credit for taxes paid to other states.

Connecticut income tax rates and brackets

Connecticut uses a progressive tax system, meaning the rate increases as your income rises. For the 2024 tax year, the rates are 3%, 5%, 5.5%, and 6.99%. The exact bracket you fall into depends on your filing status — single, married filing jointly, married filing separately, or head of household.

The brackets change each year because they are adjusted for inflation. For example, a single filer in 2024 pays 3% on income up to $21,600, then 5% on income from $21,601 to $54,450, then 5.5% on income from $54,451 to $109,050, and 6.99% on income above $109,050. If you are married filing jointly, the brackets are wider. You can find the current brackets on the Connecticut Department of Revenue Services website.

Connecticut also taxes capital gains and dividends, though at a lower rate than wages in some cases. Long-term capital gains (assets held more than one year) are taxed at a maximum rate of 5%, while short-term gains and dividends are taxed as ordinary income at your regular rate.

What income Connecticut does and does not tax

Connecticut does not tax Social Security benefits, which is one of the few income sources the state leaves untouched. Supplemental Security Income (SSI) is also not taxed. However, most other retirement income is taxable.

Pensions, 401(k) distributions, IRA withdrawals, and annuity payments are all subject to Connecticut income tax. If you receive a pension from a government employer (federal, state, or local), you may be able to exclude some or all of it, but the rules are specific and depend on when you started receiving the pension. Military pensions have their own rules as well. You should check with the Department of Revenue Services or a tax preparer about your specific situation.

Interest income from savings accounts and bonds is taxable. Rental income is taxable. Income from self-employment is taxable. Unemployment benefits are taxable. The main exceptions are Social Security, SSI, and certain other benefits like workers' compensation and some disability payments.

Filing requirements and deadlines

You must file a Connecticut return if you are a resident and your income exceeds the filing threshold for your filing status. For 2024, a single person must file if they earned more than $14,500 in wages, or if they had more than $1,000 in unearned income (like interest or dividends). The thresholds are higher for married filers and heads of household. Even if you do not meet the threshold, you may want to file if you had taxes withheld, because you could receive a refund.

Nonresidents who work in Connecticut must also file a return, even if they live in another state. You use Form CT-1040NR for nonresident returns. The deadline is April 15, the same as your federal return. If you need more time, you can request an extension, which gives you until October 15.

You can file by mail or electronically. The Department of Revenue Services encourages electronic filing because it is faster and reduces errors. You can file yourself using tax software, or you can hire a tax preparer. If your income is below a certain threshold, you may be able to use free tax preparation services through the Volunteer Income Tax Assistance (VITA) program.

How Connecticut taxes residents who work out of state

If you live in Connecticut but work in another state, you will owe tax to both Connecticut and the state where you work. Connecticut taxes you on all income you earn as a resident, regardless of where you earned it. The other state taxes you because you worked there. To avoid paying tax twice on the same income, Connecticut offers a credit for taxes paid to other states.

The credit is limited to the lesser of the tax you paid to the other state or the Connecticut tax on that income. You claim the credit on your Connecticut return using Form CT-1040. If you work in a state with no income tax (like New Hampshire or Florida), you will not receive a credit, but you will still owe Connecticut tax on that income.

If you are a Connecticut resident who works remotely for an out-of-state employer, you still owe Connecticut tax on your wages. The location of your employer does not matter — what matters is where you live and where you perform the work.

Deductions and credits available to Connecticut residents

Connecticut allows a standard deduction, which reduces the amount of income you have to pay tax on. For 2024, the standard deduction is $14,500 for single filers, $23,200 for married filers, and $17,400 for heads of household. These amounts increase each year with inflation. You can take the standard deduction or itemize deductions if itemizing results in a larger deduction.

Connecticut also 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. The amount depends on your income and family size. Connecticut also offers a property tax credit for renters and homeowners with low incomes, a dependent exemption credit, and credits for certain types of education expenses.

Some income is exempt from tax entirely. For example, if you are over 65 and your income is below a certain threshold, you may be able to exclude some of your retirement income. Military service members may be able to exclude military pay. You should review the full list of exemptions and credits on the Department of Revenue Services website or with a tax preparer to see which ones apply to you.

Frequently Asked Questions

Do I have to pay Connecticut income tax if I just moved to the state?

You owe Connecticut tax starting the day you become a resident. If you moved partway through the year, you file a part-year resident return and pay tax only on income earned after you moved. You will need to show proof of your move date, such as a lease or utility bill. File Form CT-1040 and indicate your move date.

What happens if I do not file a Connecticut return?

The Department of Revenue Services can assess penalties and interest on unpaid taxes. If you owed tax and did not file, the penalty is usually 5% of the unpaid tax per month, up to 25%. Interest accrues at a rate set by the state. If you filed late but paid on time, the penalty is smaller. You can file a return at any time, even years later, though the longer you wait, the more interest accumulates.

Can I file my Connecticut return electronically if I use tax software?

Yes. Most major tax software programs allow you to file your Connecticut return electronically at the same time you file your federal return. You will need your Social Security number, date of birth, and information about your income and deductions. Electronic filing is faster than mailing a paper return and you receive confirmation that the state received it.

Is Connecticut income tax withheld from my paycheck automatically?

Yes, if you work in Connecticut or for a Connecticut employer, your employer should withhold Connecticut income tax from your paycheck. The amount withheld depends on the W-4 form you complete. If you think too much or too little is being withheld, you can adjust your W-4 and give a new one to your employer. The goal is to have enough withheld so you do not owe a large amount when you file your return.

What if I earned income in Connecticut but moved to another state?

You file a part-year resident return for the year you moved. You pay Connecticut tax on income earned while you were a resident and owe tax to your new state on income earned after you moved. You may also owe tax to Connecticut on income earned in Connecticut even after you moved, depending on the type of income and your new state's rules. A tax preparer can help you sort out which state owes what.