Connecticut Retirement Taxes (2026): IRA Rule, $15M Estate

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.

How Connecticut taxes retirement income (statute-cited)

Income tax	Graduated, 2% to 6.99% (6 brackets)
Social Security	Fully exempt below $75,000 AGI (single/MFS/HOH) / $100,000 (MFJ); above the lines, at least 75% remains exempt (at most 25% taxable, limited to the federally taxable amount)
Pension / annuity	100% deduction below the same AGI thresholds; phases out above them, reaching zero at $100,000 (single) / $150,000 (joint) — 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 retirement	100% exempt regardless of income
Estate / gift tax	Estate 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, capped at $40,000 for deaths on or after July 1, 2016 — with roughly a 50% reduction when the surviving spouse is sole beneficiary. 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.

Connecticut vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Connecticut	Exempt below $75k/$100k AGI; ≥75% exempt above	100% deduction below AGI thresholds; IRAs join fully in 2026	Yes — $15M exemption, flat 12%	None
New York	Not taxed	$20,000/person exclusion at 59½+; gov pensions exempt	Yes — $7.35M with cliff	None
Massachusetts	Not taxed	Private pensions/401(k)/IRA taxed at 5%; gov pensions exempt	Yes — $2M via credit	None
Florida	Not taxed	Not taxed (no income tax)	None	None

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.

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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.

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