CONNECTICUT
Return to Retiree Tax Map
NICKNAME
The Constitution State
BOTTOM LINE: NOT TAX-FRIENDLY
Connecticut is a tax nightmare for many retirees. Its real estate taxes are the second-highest in the nation, according to the Tax Foundation. It allows a 50% exclusion for military pensions but no exemptions or tax credits for other types of pensions or other retirement income. And it taxes a portion of Social Security benefits for taxpayers above certain income thresholds.
STATE SALES TAX
6.35% for most items; 7% for certain luxury items. There are no local sales taxes.
INCOME-TAX RANGE
Low: 3% (up to $20,000 of taxable income for married joint filers, $10,000 for those filing individually)
High: 6.7% (on the amount over $500,000 for married joint filers; on the amount over $250,000 for those filing individually)
SOCIAL SECURITY
Social Security is exempt for individual taxpayers with federal adjusted gross income of less than $50,000 and for married taxpayers filing jointly with federal AGI below $60,000.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
All out-of-state government and federal civil-service pensions are fully taxed. Connecticut exempts 50% of federally taxable military retirement pay from state income tax. The exemption applies to federal retirement pay for members of the U.S. Army, Navy, Air Force, Marines, Coast Guard, and Army and Air National Guard. Benefits received by a beneficiary under an option or election made by a retired member are also covered by this law.
PROPERTY TAXES
Taxes are assessed and collected by individual towns or other taxing districts. All assessments are at 70% of fair market value.
Tax breaks for seniors: Connecticut offers property tax credits to homeowners who are at least 65 years old and meet income restrictions. Income ceilings are $39,500 for married claimants (with a maximum benefit of $1,250) and $32,300 for single claimants (with a maximum benefit of $1,000). Renters under those income ceilings may qualify for a rebate. Municipalities may provide additional tax relief for seniors.
INHERITANCE AND ESTATE TAXES
Connecticut imposes an estate tax that taxes the transfer of estates valued at $2 million or more at a progressive rate starting at 7.2%. The rate rises to a maximum of 12% for an amount above $10.1 million. There is no inheritance tax.
Visit RetirementLiving.com for a complete rundown of taxes in Connecticut.
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