Connecticut retirement taxes follow a tax policy wherein it excludes from state taxation an equivalent amount of Social Security income that is also exempt from federal income tax by the United States government. Moreover, Connecticut might offer additional exemptions beyond this threshold, contingent upon the taxpayer’s annual income.
Connecticut Retirement Taxes Exemptions
The state provides a complete Connecticut Retirement Taxes exemption on federally taxable Social Security income for individuals filing as single or married individuals filing separately, as long as their federal adjusted gross income does not exceed $75,000 per year. Additionally, couples filing jointly are eligible for the exemption if their combined federal-adjusted gross income is below $100,000 annually.
Taxpayers whose federal adjusted gross income exceeds those specified limits are eligible for a partial Connecticut Retirement Taxes exemption. In such cases, only a maximum of 25% of their total Social Security benefits would be subject to taxation.
Pension and Annuity Benefits in General
If you earn a pension or annuity and you’re filing your Connecticut Retirement taxes as a single person or married but separately, you won’t have to pay any income taxes on those earnings if your total yearly income (AGI) is under $75,000. For couples who file their taxes together and have an AGI under $100,000, their pension and annuity earnings are also completely tax-exempt.
In the past, if you made more money than those limits, you couldn’t get any special breaks on your pension and annuity earnings. However, this year, the people who make more money will also get some benefits. Starting in 2024, some retirees who earn more will still qualify for benefits, but the amount of benefits will depend on how much they earn.