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.
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, was located this session via a bill-tracking aggregator, but its current status could not be confirmed against the Connecticut General Assembly’s own bill-status site, which failed certificate validation on every attempt this session.
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 this session’s research indicates is a full deduction for taxpayers under the AGI thresholds, phasing out above them. This specific detail could not be independently confirmed against a directly rendered Connecticut Department of Revenue Services page or statute this session, because portal.ct.gov pages 404’d or returned unreadable PDF bytes, and cga.ct.gov failed certificate validation on every attempt. |
| 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: this session’s research indicates 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. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you hire anyone. The matching service is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here. You stay on this page.
What happens when you press the button
It requests contact details and phone verification by text. Nothing loads and nothing reaches Kapitalwise until you press the button. Submitting the form does not guarantee an adviser or a match. This matching form is not tax or legal advice.
Social 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.
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 (PDF retrieved but not text-renderable this session)
- 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.