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Connecticut Retirement Taxes (2026): The IRA Deduction Hits 100% and the Estate Exemption Jumps to $15M

Clear Money Guide

What this state guide covers

A quick view of the questions, practical details and source notes below.

How Connecticut taxes retirement income (statute-cited)
The 2026 IRA milestone (and who misses it)
Estate, gift, and the $15M federal tie-in
Probate: reasonable fees — but a percentage court fee

Comparison tables scroll horizontally on smaller screens.

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: Connecticut is far friendlier to retirees than its reputation — if your income sits under the thresholds. Social Security is fully exempt when federal AGI is below $75,000 (single) / $100,000 (joint), pension and annuity income gets a 100% deduction below those same lines, and 2026 is the milestone year when IRA distributions join at 100% (the phase-in reached 75% for 2025 and completes for tax year 2026 under CGS §12-701(a)(20)). Guides that say Connecticut “taxes all retirement income as regular income” are describing high earners, not the typical retiree. At death, the estate exemption is now $15,000,000 — but Connecticut keeps two quirks nobody else has: the nation’s only state gift tax, and a probate court fee computed as a percentage of the gross estate.

Federal civil service pensions in Connecticut: does Connecticut tax federal pensions.

State retirement-income forms, line by line: Connecticut Schedule 1 line 48b.

Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Connecticut tax on inherited IRA withdrawals.

Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Connecticut tax 403(b) and 457(b) withdrawals.

Drawing a pension? Whether the state withholds tax from it, from its own documents: Connecticut tax withholding on pension payments.

Before the tax question, the Connecticut Municipal Employees’ Retirement System options, DROP and refund rules, from the Comptroller’s own documents: Connecticut MERS retirement decisions.

Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Connecticut a community property state?.

Selling your home? How the state taxes the profit, from its own tax documents: Does Connecticut tax the profit from selling your home?.

The state’s income tax schedule: the Connecticut tax brackets for 2026.

For a pension earned elsewhere or paid after you move: does Connecticut tax out-of-state pensions.

Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Connecticut tax withholding on IRA and 401(k) withdrawals.

Looking ahead to 2027? The state’s estate tax exemption for deaths in 2027, from its own tax documents: Connecticut estate tax exemption 2027.

For trust income specifically: does Connecticut tax trust income.

For dividends and interest specifically: does Connecticut tax dividends and interest.

Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Connecticut have an inheritance tax?.

Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Connecticut have a gift tax?.

For annuity payments specifically: does Connecticut tax annuity income.

For military retired pay: does Connecticut tax military retirement.

Saving for a child’s college? The state’s 529 break has its own page: Connecticut 529 plan tax deduction.

For the sale of stocks, funds or real estate: does Connecticut tax capital gains.

For 401(k) and IRA withdrawals specifically: does Connecticut tax 401(k) and IRA withdrawals.

How Connecticut taxes retirement income (statute-cited)

Income taxGraduated, 2% to 6.99% (7 brackets)
Social SecurityFully exempt below $75,000 AGI (single/MFS) / $100,000 (MFJ/HOH); above the lines, at least 75% remains exempt (at most 25% taxable, limited to the federally taxable amount)
Pension / annuity100% deduction below $75,000 AGI (single, married filing separately or head of household) / $100,000 (married filing jointly); phases out above those amounts, reaching zero at $100,000 (single, married filing separately or head of household) / $150,000 (married filing jointly) — a phase-out that replaced the old cliff beginning TY2024
IRA distributions (non-Roth)Deduction phased in: 75% for TY2025, 100% beginning TY2026 — same thresholds and phase-out (CGS §12-701(a)(20))
Military retirement100% exempt regardless of income
Estate / gift taxEstate exemption $15,000,000 (2026), flat 12%, total tax capped — plus the only state-level gift tax in the country (unified with the estate tax)

The 2026 IRA milestone (and who misses it)

Connecticut’s legislature phased in an IRA deduction over several years: 75% of IRA distributions were deductible for 2025, and beginning with tax year 2026 the deduction is 100% for taxpayers under the $75,000/$100,000 AGI thresholds (CGS §12-701(a)(20); CGA OLR Report 2024-R-0130). The catch is the thresholds themselves: they are not indexed, and the deduction phases to zero at $100,000/$150,000 — so a large one-time IRA withdrawal can push you over the line and cost you the deduction on all retirement income streams at once. Withdrawal sequencing matters more in Connecticut than almost anywhere else.

Estate, gift, and the $15M federal tie-in

Connecticut’s estate exemption is statutorily tied to the federal basic exclusion amount (Conn. Gen. Stat. §12-391(g)) — so when OBBBA set the federal amount at $15,000,000 for 2026, Connecticut’s exemption rose automatically from $13.99M to $15M, with a flat 12% rate above it. Almost no estates pay it anymore. But Connecticut remains the only state that levies a gift tax (unified with the estate tax), so large lifetime gifts have state consequences here that don’t exist in the other 49. Full table: estate tax by state.

Probate: reasonable fees — but a percentage court fee

Fiduciary and attorney compensation follows a “reasonable compensation” standard (the Hayward v. Plant factors) — no statutory percentage. What is statutory is Connecticut’s probate court fee, computed on the gross estate (C.G.S. §45a-107): for larger estates, $1,865 plus 0.25% of the amount over $500,000 up to $2,000,000, then $5,615 plus 0.5% of the amount over $2,000,000, capped at $40,000 once the basis reaches $8,877,000 for deaths on or after July 1, 2016 — with any portion of the fee basis that is determined by property passing to the surviving spouse reduced by fifty per cent. Small estates: up to $40,000 of solely owned personal property can pass by affidavit in lieu of administration (C.G.S. §45a-273; no solely owned CT real property). Context: probate cost by state · small-estate limits by state · will vs. trust calculator.

Is Connecticut a good state to retire in for taxes?

Below the AGI thresholds, genuinely yes — from 2026, a retiree under $75,000/$100,000 AGI pays Connecticut nothing on Social Security, pensions, annuities, or IRA withdrawals. Above the lines, the picture flips fast: the deductions phase out entirely by $100,000/$150,000 and rates run to 6.99%. The estate tax now touches almost no one at $15M, leaving the gift tax and the probate court fee as the planning quirks worth knowing. The threshold cliff is the whole game: manage AGI, and Connecticut is quietly competitive with the no-tax states for the typical retiree.

Does Connecticut tax Social Security? All 51 jurisdictions, 202643 do not tax Social Security at any income level. 8 tax it only above an income or age limit. Connecticut is in the second group.Does Connecticut tax Social Security? All51 jurisdictions, 202643 do not tax Social Security at any incomelevel. 8 tax it only above an income or agelimit.Connecticut is in the second group.Not taxed at any income (43)Taxed only above a limit (8)ALAKAZARCACOCTDEDCFLGAHIIDILINIAKSKYLAMEMDMAMIMNMSMOMTNENVNHNJNMNYNCNDOHOKORPARISCSDTNTXUTVTVAWAWVWIWYPostal abbreviations, alphabetical. TheDistrict of Columbia is counted as ajurisdiction, which is why the total is 51 andnot 50.Being in the second group does not mean thebenefits are taxed – it means the exemptionstops at an income or age line. This guide’sown table gives the exact figures.Counted from Clear Money Guide’s 2026 51-jurisdictionretirement-tax table, where every row carries its statutecitation. Table read 2026-08-17.
Connecticut is one of 8 jurisdictions that exempt Social Security only up to an income or age limit; the other 43 do not tax benefits at any income level in 2026. Connecticut’s exact limits are in the table on this page; all 51 rules: the 51-state table.

Connecticut vs. common alternatives

StateSocial SecurityPension / 401(k) / IRAEstate taxInheritance tax
ConnecticutExempt below $75k/$100k AGI; ≥75% exempt above100% deduction below AGI thresholds; IRAs join fully in 2026Yes — $15M exemption, flat 12%None
New YorkNot taxed$20,000/person exclusion at 59½+; gov pensions exemptYes — $7.35M with cliffNone
MassachusettsNot taxedPrivate pensions/401(k)/IRA taxed at 5%; gov pensions exemptYes — $2M via creditNone
FloridaNot taxedNot taxed (no income tax)NoneNone

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Connecticut may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Connecticut

Per the SEC’s July 2026 Investment Adviser roster, Connecticut has 500 SEC-registered advisory firms (#8 nationally) managing $3.42 trillion (#10 by AUM). Full breakdown: Connecticut advisor statistics. Reviewing fee structures: fee-drag calculator.

Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Connecticut:

Leaving Connecticut? See leaving Connecticut in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Connecticut

Connecticut sets probate compensation by a “reasonable fee” standard with no percentage schedule, so anyone quoting a firm figure is estimating. And the small-estate shortcut of $40,000 does not clear a solely owned house on its own, which is the detail most guidance omits. Full detail with the governing statute, the court filing fee and the threshold: Connecticut probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Connecticut Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/connecticut-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Figures verified against the Connecticut Department of Revenue Services CT-1040 instructions for 2024 and 2025, its seniors flyer and estate and gift tax page, and C.G.S. §§45a-107 and 45a-273 on September 30, 2026; the 2026 income tax rate schedule, the 2025 estate exemption, and the only-state gift tax statement were not re-checked.

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