Updated October 5, 2026. Quick answer: Yes. Connecticut taxes trust income, and the 2025 instructions tell a resident trust to multiply Line 1 “by 6.99% and enter the result” to figure the tax on Connecticut taxable income.
How Connecticut treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Connecticut taxes trusts and estates under its income tax, and the Department sorts every trust into one of three statuses. The source says: “either a resident trust, nonresident trust, or part-year resident trust” for income tax purposes. |
| Who counts as a resident trust | Under Conn. Gen. Stat. 12-701, residency of a trust follows the residency of the person whose property funded it, and the Department applies the same residency criteria it uses for individuals. The source says: “a resident of this state at the time the property was transferred” to the trust if the trust was then irrevocable, with parallel rules for testamentary and revocable trusts. |
| Trustee and beneficiary residence | The Department states that where the trustee or a beneficiary lives is not the test. The source says: “The residence of the fiduciary or the beneficiary does not affect” the status of a trust or estate as resident or nonresident. |
| Rate on trust income | Trusts and estates are taxed at a single rate, and the 2025 instructions tell a resident trust to multiply Line 1 “by 6.99% and enter the result” to find the Connecticut income tax. |
| Distribution deduction | Connecticut starts from federal figures, and the instructions refer to deductions relating to distributions to beneficiaries without printing a separate state deduction. The statute defines the starting base as “taxable income of the fiduciary of such trust or estate as determined” for purposes of the federal income tax. |
| Nonresident trusts | A nonresident trust owes Connecticut tax only on income from Connecticut sources, and it files if it had such income. The source says: “The fiduciary of a nonresident trust or estate must file Form CT‑1041” if the trust or estate had income derived from or connected with sources within Connecticut. |
| Return to file | A resident trust files Form CT-1041 if it must file a federal Form 1041 or had Connecticut taxable income. The source says: “Is required to file a federal Form 1041 for the taxable year” or had any Connecticut taxable income. |
| Part-year resident trusts | A trust funded while revocable that later became irrevocable can be part-year resident when the grantor’s residency status changed between the two years. The source says: “It was revocable when property was transferred to it” but has become irrevocable subsequently, and the grantor’s residency status differs between those years. |
A $10,000 example
A trust with $10,000 of taxable income that it keeps, rather than distributes, is taxed at 6.99%, computed as $10,000 x 6.99% = $699, before any deduction or exemption the state allows. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Connecticut taxes retirement income, whether Connecticut taxes pensions, what a living trust costs in Connecticut, and federal trust tax brackets.
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Answer againSources
- Form CT-1041 Return Instructions, Connecticut Income Tax for Trusts and Estates, Rev. 12/25 (Connecticut Department of Revenue Services): https://portal.ct.gov/-/media/drs/forms/2025/estate/ct-1041-instructions_1225.pdf
- Connecticut General Statutes Chapter 229, Income Tax, Secs. 12-700 and 12-701 (Connecticut General Assembly): https://www.cga.ct.gov/current/pub/chap_229.htm
- Trust and Estates Tax Information (Connecticut Department of Revenue Services): https://portal.ct.gov/DRS/Taxes/Trust-and-Estates/Tax-Information
Sources: the primary documents linked above, read on October 5, 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.