Connecticut's Social Security Tax Rules: What Retirees Need to Know in 2024

When planning retirement finances, one critical question many Americans overlook is whether their state will tax their Social Security income. If you’re living in or moving to Connecticut, understanding these tax implications becomes essential. Does CT tax Social Security? The answer is yes, but with important income-based thresholds that could significantly impact your tax bill.

Connecticut’s Income Thresholds for Social Security Taxation

Connecticut stands out among states that do tax Social Security benefits, but the burden isn’t uniform across all retirees. The state has structured its taxation around your adjusted gross income (AGI), creating two distinct scenarios for benefit recipients.

Single filers in Connecticut facing Social Security taxation need to pay attention to the $75,000 AGI threshold. If your combined income stays below this level, you can deduct most or all of your Social Security benefits, effectively sheltering them from state taxation. However, those crossing this threshold face a meaningful tax consequence: they can still deduct 75% of their Social Security payments, meaning roughly one-quarter of benefits become subject to Connecticut’s state income tax.

For married couples filing jointly, the threshold climbs to $100,000. Below this income level, Connecticut allows substantial deductions on Social Security benefits. Joint filers exceeding $100,000 in AGI face the same 75% deduction allowance as singles, placing 25% of their benefits in the taxable income column.

The Broader Landscape: Other States Taxing Social Security

Connecticut isn’t alone in imposing state-level Social Security taxation. A total of 10 states have implemented taxes on retirement benefits, each with their own rule variations. Beyond Connecticut, taxpayers in Colorado, Kansas, Minnesota, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont should examine their specific state’s requirements.

Kansas uses a straightforward approach: residents with AGI of $75,000 or less pay no state tax on Social Security benefits. Those above that income level enter the taxable zone.

Montana’s system phases in taxation gradually. Residents earning under $25,000 annually (or $32,000 for joint filers) can deduct their entire Social Security retirement income. Starting in 2024, benefit taxation aligns with federal treatment for higher earners.

Nebraska employs a sliding scale methodology tied to AGI thresholds of $44,460 for individuals and $59,100 for married couples. The state has committed to phasing out its Social Security tax entirely by 2025, offering eventual relief for retirees.

Rhode Island taxes benefits only for retirees who haven’t reached full retirement age. Those at full retirement age with AGI below $86,350 (single) or $107,950 (joint) avoid state taxation entirely.

Planning Your Connecticut Retirement: What This Means

Understanding whether Connecticut taxes your Social Security requires honest assessment of your income projections. If you’re borderline on those thresholds—say you’re a single filer close to $75,000 in AGI—strategic income management through timing of withdrawals, Roth conversions, or other sources might help optimize your tax situation.

New Mexico, Vermont, and Utah offer their own variations on age-based, income-based, or credit-based exemptions, showing that tax treatment on Social Security remains highly state-specific. Utah recently introduced an income-based tax credit system, reducing the credit by 25 cents per dollar earned above $30,000 (singles) or $50,000 (joint filers).

States Without Social Security Taxation

For comparison, nine states impose no income tax whatsoever, automatically protecting Social Security recipients: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Bottom Line for Connecticut Residents

Does CT tax Social Security benefits? Yes, but with income-dependent relief mechanisms. As you approach or plan your retirement transition into Connecticut, calculate your expected AGI including all income sources. If you’ll likely exceed state thresholds, discuss tax-efficient withdrawal strategies with a financial advisor to minimize the impact of Connecticut’s Social Security tax on your retirement lifestyle.