State-by-State Guide to Taxes on Retirees - Connecticut
Tool | November 2018

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Map of Connecticut

Least Tax-Friendly

One of Kiplinger’s top ten least tax-friendly states for retirees, the Constitution State is a tax nightmare for many retirees. Its real estate taxes are some of the highest in the nation, and the relief seniors can get from them modest. Though Connecticut does not tax military pensions, it has 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

The state taxes most items at 6.35%, but localities are not allowed to add to that. Jewelry valued at more than $5,000 and clothing, footwear and accessories priced at more than $1,000 per item are taxable at 7.75%.

Income Tax Range

Low: 3% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for those filing individually)

High: 6.99% (on the amount over $1 million for married joint filers and over $500,000 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 of less than $60,000.

Exemptions for Other Retirement Income

Railroad Retirement benefits are exempt. Military pensions are excluded from state income tax.


Taxable at ordinary income tax rates.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Taxable at ordinary income tax rates.

Private Pensions

Taxable at ordinary income tax rates.

Public Pensions

Military pensions are excluded from state income tax. All out-of-state government and federal civil-service pensions are fully taxed.

Property Taxes

The median property tax on Conneticut’s median home value of $269,300 is $5,443.

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 $43,000 for married couples (with a maximum benefit of $1,250) and $35,300 for singles (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.

Vehicle Taxes

Sales tax is due at purchase: 6.35% for vehicles under $50,000; 7.75% for those over. In addition, vehicles are subject to an stiff annual levy, whether or not they’re registered for use. The rates are set by individual municipalities. Legislation implemented in 2016 lowered the cap on these levies. For example, the owner of a $20,000 vehicle who lived in Hartford would pay $1,366 annually.

Inheritance and Estate Taxes

Estates valued over $2.6 million (in 2018) are subject to estate tax. The exemption will rise to $3.6 million in 2019. Rates range from 7.2% to 12%. Connecticut is the only state with a gift tax on assets you give away while alive. The state’s tax law requires that you file Connecticut gift tax returns every year to identify such gifts; however, taxes (at rates ranging from 7.2% to 12%) are due only when the aggregate value of gifts made to any individual since 2005 exceeds $2 million.

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