2026 Connecticut Retirement Income Tax Exemptions: Social Security, Pensions, IRAs & Military Retirement
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?
Under current Connecticut law, exemption eligibility and amounts are determined based on the type of pay and the taxpayer’s total federal adjusted gross income (AGI).
Connecticut continues to offer some of the most generous retirement income tax exemptions in the Northeast. Beginning with the 2024 tax year, the state eliminated the previous “tax cliff” for many retirees by phasing out pension and IRA exemptions over higher income ranges. As of the 2026 tax year, the IRA exemption has fully phased in.
Related Post: When To Apply For Social Security Retirement Benefits By Age
Social Security
Connecticut exempts 100% of federally taxable Social Security benefits for taxpayers with federal AGI below:
$75,000 for Single, Married Filing Separately, and Head of Household filers
$100,000 for Married Filing Jointly
Taxpayers above these thresholds still receive a partial exemption, limiting the amount of Social Security subject to Connecticut income tax.
Railroad Retirement Benefits and Military Retirement
Connecticut continues to exempt 100% of railroad retirement benefits and military retirement pay from state income tax.
Related Post: Veterans Aid & Attendance Benefits Eligibility Guide
Teacher’s Retirement
Connecticut teachers may deduct 50% of Teachers’ Retirement pension income regardless of income. Taxpayers who also qualify for the general pension exemption may claim whichever deduction provides the greater tax benefit, but not both.
Pension, (401(k), 403(b), 457(b))
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). Distributions are included under the pension and annuity exemption.
Taxpayers whose AGI exceeded these thresholds received no deduction. Connecticut now provides a 100% exemption for qualifying taxpayers below the income thresholds and a gradual phase-out for taxpayers with higher AGIs, instead of the former all-or-nothing deduction.
Taxpayers who exceeded 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 – 77,499 | $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
Connecticut completed its multi-year phase-in of IRA income exemptions beginning with the 2026 tax year.
Eligible taxpayers may now deduct 100% of qualifying IRA distributions, subject to the same federal AGI limits and phase-out schedule that apply to pension and annuity income.
The phase-in occurred as follows:
| Tax Year | % of IRA Income Exempt for eligible taxpayers |
| 2023 | 25% |
| 2024 | 50% |
| 2025 | 75% |
| 2026 and later | 100% |
Taxpayers above the applicable AGI thresholds may still qualify for a reduced exemption under Connecticut’s phase-out schedule.
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 former 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.
