Connecticut retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 6.99%Connecticut has graduated rates from 2% to 6.99%. |
|---|---|
| Social Security | TaxedSocial Security is fully exempt if federal AGI is below $75,000 (single) or $100,000 (joint). Above that, at most 25% of benefits is taxable. |
| Pensions | Partly taxedPension and annuity income is 100% exempt if AGI is below $75,000 (single) or $100,000 (joint); the exemption phases out and ends at $100,000 (single) or $150,000 (joint). |
| 401(k) and IRA withdrawals | Partly taxedFrom tax year 2026, IRA distributions are 100% exempt under the same AGI limits (50% in 2024, 75% in 2025). 401(k), 403(b) and 457(b) payouts use the pension exemption. |
| Government pensions | Partly taxedGovernment pensions follow the same AGI-based pension exemption as other pensions. |
| Military retirement pay | Not taxedMilitary retirement pay is fully exempt from Connecticut income tax, regardless of income. |
| Estate tax | Yes, above $15,000,000For 2026 deaths, estates above $15 million pay a flat 12% Connecticut estate tax. Connecticut also has a gift tax. |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 65+ or disabled with income up to $46,300 (single) or $56,500 (married) can get annual property tax credits of about $1,000-$1,250. |
| Sales tax | Statewide 6.35%; no local sales tax. |
Recent changes and good to know
- 2026 is the first year the IRA distribution exemption is 100% (50% in 2024, 75% in 2025).
- The pension exemption changed from an all-or-nothing cliff to a phase-out between the thresholds.
- The 2026 estate tax exemption tracks the new $15 million federal amount set by the 2025 federal tax law (OBBBA).
How to lower your retirement taxes in Connecticut
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Connecticut too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Connecticut tax retirement income?
Partly: Connecticut fully exempts military pay and, for middle incomes, Social Security, pensions and (from 2026) IRA income, but higher earners pay tax on them.
Does Connecticut tax Social Security?
Social Security is fully exempt if federal AGI is below $75,000 (single) or $100,000 (joint). Above that, at most 25% of benefits is taxable.
Does Connecticut tax pensions?
Pension and annuity income is 100% exempt if AGI is below $75,000 (single) or $100,000 (joint); the exemption phases out and ends at $100,000 (single) or $150,000 (joint).
Does Connecticut tax 401(k) and IRA withdrawals?
From tax year 2026, IRA distributions are 100% exempt under the same AGI limits (50% in 2024, 75% in 2025). 401(k), 403(b) and 457(b) payouts use the pension exemption.
Does Connecticut tax military retirement pay?
Military retirement pay is fully exempt from Connecticut income tax, regardless of income.
Does Connecticut have an estate or inheritance tax?
For 2026 deaths, estates above $15 million pay a flat 12% Connecticut estate tax. Connecticut also has a gift tax.
Sources (last verified 2026)
- Estate and Gift Tax Information — Connecticut Department of Revenue Services (2026-09-24)
- Connecticut Military and Veterans Benefits — U.S. Army (MyArmyBenefits) (2026-09-24)
- Connecticut State Taxes: 2026 Tax Season — AARP (2026)
- Connecticut Retirement Taxes (2026) — ClearMoneyGuide (2026)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.