Updated October 16, 2026. Quick answer: Connecticut’s instructions name both plans: they list pension and annuity income “such as from a defined benefit plan, 401(k), 403(b) or 457(b) plans” as income that may qualify for a subtraction, but the subtraction is income-tested and unavailable at higher federal AGI.
State retirement-income forms, line by line: Connecticut Schedule 1 line 48b.
Connecticut at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Yes, 403(b) and 457(b) plans are named as pensions that may qualify, subject to the AGI limit |
| Do the state’s documents name these plans? | The documents read name both 403(b) and 457 plans |
| Retirement exclusion or credit | Pension and annuity subtraction (Schedule 1, Line 48b), reduced by a federal AGI phase-out table |
| Public-employee pension rule | Yes, the instructions give teachers’ retirement pay its own subtraction line |
| Rate in the documents read | Graduated, from 2.00% to 6.99% on the 2025 return |
| Changed for 2026? | The documents read describe no 2026 change |
What the Connecticut documents say
The Form CT-1040 instructions say that if a taxpayer received pension or annuity income, “you may qualify for this subtraction modification”. The instructions tie the subtraction to income, for a taxpayer “with federal AGI for the taxable year of less than $100,000” if single, married filing separately or head of household, and less than $150,000 for married filing jointly.
The Department’s tax tips page for senior citizens also lists “401(k), 403(b) or 457(b) plans, or distributions from an IRA” among the income that can qualify. The instructions give teachers’ retirement pay a separate line: “Subtract 50% of the income received from the Connecticut Teachers’ Retirement System”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The 2025 instructions print graduated rates from 2.00% up to 6.99%, so the rate a reader pays depends on taxable income and filing status.
- The subtraction is reduced by a phase-out table in the instructions; a reader’s own subtraction depends on federal AGI and filing status.
Common mistakes
- Assuming Connecticut’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Connecticut taxes 401(k) and IRA withdrawals, Connecticut retirement taxes, whether Connecticut taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- Form CT-1040 Connecticut Resident Income Tax Return Instructions (Rev. 12/25): 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
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.