Did you know that Connecticut law provides income tax exemptions for Social Security benefits, railroad retirement benefits, military retirement pay, pension and annuity income, teacher pension income, and individual retirement account (IRA) distributions?
Currently, exemption eligibility and amounts are determined based on the type of pay and the taxpayer’s total federal adjusted gross income (AGI). If you haven’t qualified in the past, look again because thresholds are increasing for 2024.
Related Post: When To Apply For Social Security Retirement Benefits By Age
Social Security
Connecticut exempts from income tax Social Security income that the federal government exempts from the federal income tax as well as some or all of the Social Security income the federal government taxes, depending on the taxpayer’s filing status and AGI.
For 2024, the law remains unchanged. Taxpayers may deduct 100% of their federally taxable Social Security income if their AGI is below $75,000 for single filers and married people filing separately or $100,000 for joint filers and heads of household.
Railroad Retirement Benefits and Military Retirement
As in 2023, for 2024 taxpayers can deduct 100% of their railroad retirement benefits and military retirement for Connecticut income tax purposes.
Related Post: Veterans Aid & Attendance Benefits Eligibility Guide
Teacher’s Retirement
Since 2021 and continuing into the 2024 tax year, taxpayers can deduct 50% of their Teacher’s Retirement pension income from their Connecticut taxable income. Taxpayers who are eligible for both the general pension and annuity exemption, discussed below, and the Teacher’s Retirement pension exemption may take whichever one is most favorable to them.
Pension, (401(k), 403(b), 457(b))
In 2023, Connecticut law exempted taxpayers with an AGI of less than $75,000 for single filers, married filing separately or head of household, and $100,000 for married filing jointly from paying Connecticut income tax on their pension and annuity income (including 401(k), 403(b), or 457(b) plans).
Taxpayers whose AGI exceeded these thresholds received no deduction. Beginning with the 2024 tax year, the law is phasing in a gradually reduced exemption for taxpayers who exceed those AGI levels, up to $100,000 for the first category and $150,000 for the second category.
Taxpayers who exceed the thresholds in the past and receive no deduction should make sure to get proper professional guidance to ensure they receive the deductions they’re entitled to for future filings.
| FEDERAL AGI
|
Deduction |
|
| Single/Married Filing Separately/Head of Household | Married Filing Jointly | |
| < $75,000 | < $100,000 | 100% |
| $75,000 – 77,4999 | $100,000 – 104,999 | 85% |
| $77,500-79,999 | $105,000 – 109,999 | 70% |
| $80,000 – 82,499 | $110,000 – 114,999 | 55% |
| $82,500 – 84,499 | $115,000 – 119,999 | 40% |
| $85,000 – 87,499 | $120,000 – 124,999 | 25% |
| $87,500 – 89,999 | $125,000 – 129,999 | 10% |
| $90,000 – 94,999 | $130,000 – 139,999 | 5% |
| $95,000 – 99,999 | $140,000 – 149,999 | 2.5% |
| >/= $100,000 | >/= $150,000 | 0% |
IRA
The gradually increasing exemptions for pension and retirement accounts also apply to IRA income. In 2023 25% of IRA income was exempt from Connecticut income tax for eligible taxpayers. In 2024, this amount increases to 50% and is scheduled to increase to 100% by 2026.
| Tax Year | % of IRA Income Exempt for eligible taxpayers |
| 2023 | 25% |
| 2024 | 50% |
| 2025 | 75% |
| 2026 | 100% |
Related Post: Elder Law Attorney Explains 2024 In Numbers
Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only.
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Joan Reed Wilson Esq. – Managing Partner
Practices in the areas of estate planning, elder law, Medicaid planning, conservatorships, probate and trust administration, and real estate. Admitted to practice in the States of Connecticut and California, she is the President of the CT Chapter of the National Academy of Elder Law Attorneys (NAELA), an active member of the Elder Law Section of the Connecticut Bar Association, accredited with the PLAN of CT for Pooled Trusts, with the Veteran’s Administration to assist clients with obtaining Aid & Attendance benefits for long-term care needs and with the Agency on Aging’s CareLink Network.
