Rocky Mengle
Connecticut state tax: overview
Connecticut is known for its higher property taxes, which can take a bite out of your budget. But there is good news on the income tax front. No matter how much you make, rates stay below 7 percent, and some residents will see lower rates starting next year.
The state also has a gift and estate tax, but most people will not need to worry about it. These taxes only apply to gifts and estates worth more than 13.61 million dollars, so unless you are incredibly generous or extremely wealthy, you are in the clear.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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Connecticut income tax
Connecticut has a graduated state individual income tax rate ranging from 2% to 6.99%, according to the Tax Foundation.
Connecticut retirement taxes
Connecticut tax on retirement benefits: Social Security benefits are tax-exempt for single and married filing separate filers with an AGI (adjusted gross income) below $75,000.
Joint and head of household filers won't have their Social Security benefits taxed as long as their AGI falls below $100,000.
Income from an annuity or pension is tax-exempt for joint filers with less than $100,000 of federal adjusted gross income and other taxpayers (including head of household) with less than $75,000 of federal AGI.
For 2024, 50% of income from IRA distributions is tax-exempt for filers who meet the same income guidelines set for pension and annuity income (less than $100,000 for joint filers and less than $75,000 for all other filers). Taxpayers who meet these guidelines can exempt a larger percentage of IRA distributions in the next few years.
- Eligible taxpayers can exempt 75% of IRA distribution income in 2025.
- Income from IRA distributions will become completely tax-exempt for eligible taxpayers in 2026.
Note: Taxpayers can deduct 50% of teacher's retirement system (TRS) pension income. However, eligible taxpayers are only eligible to deduct the general pension or annuity income or the TRS income, not both.
- Income Tax on Taxable Income: Low of 2% (on up to $10,000 for single filers and $20,000 for joint filers) and a high of 6.99% (on more than $500,000 for single filers and $1,000,000 for joint filers).
- Social Security: Partially taxable
- Pensions: Partially taxable
- 401(k) and IRA Distributions: Partially taxable
Connecticut sales tax
Connecticut's statewide sales tax is 6.35%, and localities don't charge any additional sales tax, according to data from the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Prescription drugs: Exempt
- Motor Vehicles: Taxable
How much are property taxes in Connecticut?
In Connecticut, the average effective property tax rate is 1.48%, which is higher than the national average.
Source: Tax Foundation
Connecticut Property Tax Breaks for Retirees
Property Tax Credit Program: Connecticut offers property tax credits of up to $1,250 to eligible homeowners. Married homeowners can receive a credit of up to $1,250. Other homeowners can receive a credit of up to $1,000. Connecticut residents must apply for the program and meet eligibility criteria to qualify.
- Homeowners must be 65 or older.
(Note: Homeowners with disabilities may qualify for the property tax credit if under age 65.)
Connecticut gas tax
Gasoline: $0.25 per gallon.
Diesel: $0.50 per gallon.
Source: Sales Tax Handbook
Connecticut alcohol and tobacco taxes
Product | Tax Amount |
|---|---|
Cigarettes | $3.90 per pack |
Other Tobacco Taxes | 50% of wholesale price |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Wine | $0.72 per gallon |
Beer | $0.24 per gallon |
Liquor | $5.40 per gallon |
Source: Sales Tax Handbook
Connecticut estate, gift and inheritance tax
Connecticut has an estate tax with a $13.61 million exemption (the same amount as the federal estate tax exemption).
Connecticut also imposes a gift tax with a $13.61 million exemption. Gifts or estates worth more than $13.61 million are taxed at 12%.
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