Rocky Mengle
Navigating the complexities of state taxes can be daunting, but understanding Connecticut's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Constitution State's tax system, from income and sales taxes to property taxes and retirement benefits.
Connecticut state tax: Overview
Connecticut is known for its higher property taxes, which can take a bite out of your budget. But there is some good news on the income tax front. Rates generally stay below 7%, and some residents will see lower tax rates starting next year.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Constitution State also has a gift and estate tax, but most people will not need to worry about it. Those taxes only apply to gifts and estates worth more than 13.61 million dollars, so unless you are incredibly generous or extremely wealthy, you should be 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.]
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 2025, 75% 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). That's up from 50% last year.
- In 2024, 50% of income from IRA distributions was tax-exempt for eligible filers.
- 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%.
Related Content
-
December Fed Meeting: Live Updates and CommentaryThe December Fed meeting is one of the last key economic events of 2025, with Wall Street closely watching what Chair Powell & Co. will do about interest rates.
-
This Is Why Investors Shouldn't Romanticize BitcoinInvestors should treat bitcoin as the high-risk asset it is. A look at the data indicates a small portfolio allocation for most investors would be the safest.
-
I'm a Federal Benefits Pro: I Answer These 2 Questions a LotMany federal employees ask about rolling a TSP into an IRA and parsing options for survivor benefits, both especially critical topics.
-
Are You Middle-Class? Here's the Most Tax-Friendly State for Your FamilyTax Tips We found the state with no income tax, low property tax bills, and exemptions on groceries and medicine.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
New 2026 Tax Change Could Mean More for Your IRA and 401(k) SavingsRetirement Savings Here's how the new IRS inflation adjustments will increase the contribution limits for your 401(k) and IRA in the new year.
-
Capital Gains Tax Quiz: How Well Do You Really Know IRS Investment Tax Rules?Quiz Take our capital gains tax quiz to test your investment taxes knowledge. Learn about loss rules, holding periods, and tax incentives that could impact your savings.
-
6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't)Retirement Taxes Here’s how converting your traditional retirement account to a Roth IRA can boost your nest egg — but avoid these costly scenarios.
-
Could Tax Savings Make a 50-Year Mortgage Worth It?Buying a Home The 50-year mortgage proposal by Trump aims to address the housing affordability crisis with lower monthly mortgage payments. But what does that mean for your taxes?
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
