Updated October 4, 2026. Quick answer: Yes, with a subtraction that phases out. Connecticut’s CT-1040 instructions allow a pension and annuity subtraction for distributions from “defined benefit plan, 401(k), 403(b) or 457(b) plans”. For IRAs, the legislature’s research report says taxpayers “may deduct 75% of their distributions from IRAs, other than Roth IRAs” for 2025, and the IRA deduction becomes 100% in 2026.
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.
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.
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?.
What Connecticut does with 401(k) and IRA withdrawals
The instructions limit the subtraction by income: it needs federal AGI of less than $100,000 for a single, separate or head of household filer, or less than $150,000 for joint filers. The phase-out worksheet applies at $75,000 or more (single) and $100,000 or more (joint). Roth IRA distributions are not included.
| Item | What the documents say |
|---|---|
| 401(k) and pension distributions | 100% subtracted, phased out as federal AGI rises from $75,000 (single) or $100,000 (joint) |
| Traditional IRA distributions | 75% subtracted for 2025, 100% from 2026; Roth IRAs excluded |
| State rates | 2% to a 6.99% top rate (2025) |
| Source | Connecticut Department of Revenue Services, 2025 CT-1040 instructions; Office of Legislative Research report 2025-R-0152 |
A $40,000 withdrawal
Below the phase-out income, a $40,000 401(k) distribution is fully subtracted and adds $0 of Connecticut income. A $40,000 traditional IRA distribution is 75% subtracted for 2025, so $10,000 (computed as $40,000 minus 75% of $40,000) stays in income.
Top bracket
The 2025 schedule ends with “$31,250 plus 6.99% of the excess over $500,000” for a single filer.
What changes in 2026
On the IRA deduction, the legislature’s research report says “The deduction is 100% beginning in 2026”. For 2025 it is 75%.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Connecticut taxes pensions, how Connecticut taxes retirement income, whether Connecticut taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Form CT-1040 Connecticut Resident Income Tax Return Instructions (Rev. 12/25), Tax Year 2025: https://portal.ct.gov/-/media/drs/forms/2025/income/2025-ct-1040-instructions_1225.pdf?rev=d898db2e610641b9b3e6efe6f89c6fc2&hash=06D5D5DF44FBF63ABF90A972C507F9FE
- Connecticut Tax Tips for Senior Citizens: https://portal.ct.gov/drs/individuals/connecticut-tax-tips-for-senior-citizens
- Income Tax Exemptions for Retirement Income, OLR Report 2025-R-0152: https://www.cga.ct.gov/2025/rpt/pdf/2025-R-0152.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.