Updated September 5, 2026. Quick answer: Connecticut has been phasing out pension taxation for middle-income retirees: qualifying pension and annuity income is fully exempt for single filers with federal AGI under $75,000 and joint filers under $100,000, phasing to zero by $100,000/$150,000, military retirement pay has reportedly been 100% exempt since the 2020 tax year regardless of income, and retired teachers can instead choose a flat 50% exemption on Teachers’ Retirement System income with no income cap.
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.
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.
A pension earned in another state, or paid after a move, is covered here: 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.
Trusts have their own page: does Connecticut tax trust income.
Dividends and interest have their own page: 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?.
Annuity payments have their own page: does Connecticut tax annuity income.
Military retired pay has its own page: 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.
Selling stocks, funds or real estate has its own page: does Connecticut tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Connecticut tax 401(k) and IRA withdrawals.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Connecticut taxes retirement income generally.
Pending, not current law: A bill referenced as CT HB05538, which would fully exempt Teachers’ Retirement System pensions from the personal income tax rather than the current 50% option, is listed on the Connecticut General Assembly’s own bill-status page (2025 session, read September 30, 2026) as referred to the Finance, Revenue and Bonding Committee on January 21, 2025, with no later action shown.
The rule in the source’s own words. Connecticut Teachers’ Retirement Board: “Teachers receiving income from the Connecticut Teachers’ Retirement Board may take either the 50% Teachers’ Retirement Pay subtraction that is not subject to income limitations” (source, read October 5, 2026). This page’s governing citation: Conn. Gen. Stat. sec. 12-701(a)(20)(B).
What changes in 2026. Per Connecticut Department of Revenue Services, flyer DRS-162 (source): the subtraction for IRA distributions (other than Roth IRAs) is 75 percent of the distribution for 2025 and 100 percent for 2026 and thereafter.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Public pensions, including Connecticut Teachers’ Retirement System benefits, are federal taxable income first. Retired teachers may deduct 50% of their Teachers’ Retirement System income with no income limit, or instead use the general pension and annuity subtraction if that produces a bigger deduction, but Connecticut law does not allow both for the same income, according to the Connecticut Teachers’ Retirement Board (fetched directly this session). |
|---|---|
| Private (employer) pensions | Private employer pension and annuity income is included in federal AGI and then may qualify for Connecticut’s pension and annuity income subtraction, which Conn. Gen. Stat. sec. 12-701(a)(20)(B)(xxi) and (xxii) make a full deduction for federal AGI under $75,000 (single, head of household, married filing separately) or under $100,000 (joint), phasing down in steps to zero at $100,000 and $150,000 respectively for tax years 2024 and after. |
| Federal government pensions (FERS/CSRS) | Federal civil service pensions (FERS/CSRS) are treated as ordinary pension and annuity income for Connecticut purposes and are eligible for the same income-based pension and annuity subtraction as other pensions; no separate carve-out specific to federal civilian pensions was found. |
| Military retirement pay | Connecticut fully excludes retirement pay for a retired member of the Armed Forces of the United States or the National Guard, with no percentage cap and no income limit, under the current operative clause Conn. Gen. Stat. sec. 12-701(a)(20)(B)(xvi), confirmed by direct fetch of the full statute text this session (a fabricated 75%-cap variant was checked and is NOT present in the text). The exclusion was originally enacted at 50% in 2005 (P.A. 05-251) under a differently numbered clause; the exact date it became the current uncapped exclusion could not be pinned down from the statute text alone this session. |
| IRA and 401(k)/403(b) distributions | Distributions from IRAs (other than Roth IRAs) are being phased into the same favorable treatment as pensions: Conn. Gen. Stat. sec. 12-701(a)(20)(B)(xxviii) and (xxix) and the DRS Information for Seniors flyer give a 50% subtraction for the 2024 tax year, 75% for 2025, and 100% beginning with the 2026 tax year, subject to the same AGI phase-out as the general pension and annuity subtraction. 401(k) and 403(b) distributions are treated as pension and annuity income and follow the general subtraction rules rather than the separate IRA phase-in schedule. |
| General retirement-income exclusion | Connecticut’s general pension and annuity income subtraction (which also covers IRA distributions on the separate phase-in schedule above) is a full exemption for single, head-of-household, or married-filing-separately taxpayers with federal AGI under $75,000, and for joint filers with federal AGI under $100,000, phasing down to zero by $100,000 and $150,000 respectively. |
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How our partner relationships workSocial Security
Connecticut exempts Social Security income for taxpayers below certain AGI thresholds and taxes a portion above them; see the sibling Social Security page for the exact thresholds. Social Security has its own rules in every state; see the full breakdown in how Connecticut taxes retirement income generally.
Figures verified against Conn. Gen. Stat. sec. 12-701(a)(20)(B) (Chapter 229 and its 2026 Supplement on the General Assembly website), the DRS Information for Seniors flyer (DRS-162), the Teachers’ Retirement Board page and the General Assembly bill-status page for H.B. 5538 on September 30, 2026; the quick-answer statement that military retirement pay has been fully exempt since the 2020 tax year was not re-checked, because the statute text read gives the current uncapped clause but no effective-date history.
Statute and sources
Governing citation: Conn. Gen. Stat. sec. 12-701(a)(20)(B)(xvi) (military/National Guard retirement pay, corrected from a mis-cited clause; independently re-verified against the full statute text this session).
- Connecticut Teachers’ Retirement Board, Income Tax Exemption for Teacher Pensions
- Connecticut Department of Revenue Services, DRS-162 Seniors flyer
- Connecticut General Assembly, Chapter 229 full statute text (independently re-fetched this session)
Read September 5, 2026.
Related: how Connecticut taxes retirement income generally · does Connecticut tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.