Tax in Connecticut: a complete guide
Connecticut is a small state that has become an in-demand place to live. High taxes and a higher cost of living can accompany that. Here’s your guide to all things tax-related in Connecticut.
The foundation found that Connecticut had the second highest tax burden in the US at 15.4 percent – second only to New York.
At a glance, Connecticut’s state taxes include:
Income tax of up to 6.99 percent
Sales tax of 6.35 percent
Taxes on all forms of retirement income
But what might that mean for a taxpayer?
Connecticut income tax
In addition to paying federal income tax, all US states (with some exemptions) impose their own income taxes. State income tax varies dramatically between states, with some charging zero percent and others charging more than ten percent on top of federal income tax. Connecticut imposes a state income tax on individuals and businesses.
With a top income tax rate of 6.99 percent, Connecticut has a higher rate than some of its neighboring states (such as Massachusetts' flat rate of five percent income tax no matter what you earn), but it’s low in comparison to New York state’s top rate of 10.9 percent.
In contrast to federal income tax, Connecticut’s state income tax applies the same to both ordinary income and capital gains. Connecticut’s state income tax is progressive, meaning the more taxable income you have, the more you will be taxed.
What are the Connecticut state income tax brackets for 2023/2024?
| Taxable income (single income) | Taxable income (married couple) | Income tax rate |
|---|---|---|
| $0 to $10,000 | $0 to $20,000 | 3 percent |
| $10,000 to $50,000 | $20,000 to $100,000 | 5 percent |
| $50,000 to $100,000 | $100,000 to $200,000 | 5.5 percent |
| $100,000 to $200,000 | $200,000 to $400,000 | six percent |
| $200,000 to $250,000 | $400,000 to $500,000 | 6.5 percent |
| $250,000 to $500,000 | $500,000 to $1,000,000 | 6.9 percent |
| $500,000 or more | $1,000,000 or more | 6.99 percent |
To understand how that might apply to an individual, let’s consider someone with a taxable income of $600,000.
This person’s taxable income means they will be taxed at 6.99 percent, but because of the progressive tax system, their salary is taxed differently according to each bracket.
Here’s how this individual’s salary would break down:
Their first $10,000 of income is taxed at three percent ($300)
The income from $10,000 to $50,000 is taxed at five percent ($2,000)
The bracket of income from $50,000 to $100,000 is taxed at 5.5 percent ($2,750)
The portion of their income from $100,000 to $200,000 is taxed at six percent ($6,000)
Their income from $200,000 to $250,000 is taxed at 6.5 percent ($3,250)
Their income from $250,000 to $350,000 is taxed at 6.9 percent ($6,900)
And lastly, their income over $500,000 – for this individual a total of $100,000 – is taxed at 6.99 percent ($6,999)
So, in total, this person will pay $28,199 in Connecticut state income tax.
Connecticut sales tax
Connecticut has a relatively straightforward approach to sales tax, with just one blanket sales tax across the state and no local sales tax. Sales tax is a flat 6.35 percent on most goods and services.
Like many states, Connecticut also has excise taxes on alcohol and cigarettes. All of these excise duties apply on top of the state sales tax. Here’s what you need to know:
| Connecticut wine tax | $0.79 per gallon | Wine vendors are responsible for paying a state excise tax of $0.79 per gallon, plus Federal excise taxes, for all wine sold in Connecticut. |
|---|---|---|
| Connecticut beer tax | $0.24 per gallon | Beer vendors are responsible for paying a state excise tax of $0.24 per gallon, plus Federal excise taxes, for all beer sold in Connecticut. |
| Connecticut liquor tax | $5.94 per gallon | Liquor vendors are responsible for paying a state excise tax of $5.94 per gallon, plus Federal excise taxes, for all liquor sold in Connecticut. |
| Connecticut cigarette tax | $4.35 per pack | Smokers in Connecticut pay a high price: this is one of the USA's highest excise duties on cigarettes. |
Connecticut property tax
Connecticut’s property tax rate is set at a municipal level and therefore varies across the eight counties in the state. Municipalities in Connecticut apply property taxes in terms of mill rates. The mill rate of a property is $1 in taxes for each $1,000 in assessed value.
The US average effective property tax rate is 1.07 percent. Property taxes in Connecticut are higher than this average. Connecticut’s median property tax payment is a hefty $6,096 per year.
Property taxes vary by county and house value, so there are no blanket figures. However, the table below gives the average property tax rate for properties in Connecticut’s eight counties.
| County | Median home value | Median annual property tax payment | Average property tax rate |
|---|---|---|---|
| Fairfield County | $433,000 | $7,928 | 1.83 percent |
| Hartford County | $242,900 | $5,838 | 2.40 percent |
| Litchfield County | $258,300 | $5,335 | 2.07 percent |
| Middlesex County | $293,300 | $5,886 | 2.01 percent |
| New Haven County | $252,300 | $6,002 | 2.38 percent |
| New London County | $246,800 | $4,808 | 1.95 percent |
| Tolland County | $259,700 | $5,818 | 2.24 percent |
| Windham County | $210,300 | $4,049 | 1.93 percent |
Connecticut estate tax
Like many of its neighbors in the northeast, Connecticut imposes an estate tax. However, the threshold for state taxes on an estate is high, standing at $9.1 million.
Rates begin at 11.6 percent for the first $1 million above the exemption. The top rate is 12 percent for the portion of any estate that exceeds $10.1 million in value.
Connecticut’s allowances are generous compared to neighboring state Rhode Island – where estates are taxed as soon as they surpass a value of $1,733,264 – with a top rate of 16 percent for the portion of an estate over $10.04 million.
Connecticut motor tax
The state sales tax is higher when buying a car, leaping to 7.75 percent for cars costing more than $50,000.
In addition to the cost of a vehicle, Connecticut has excise duties on fuel. Regular fuel is taxed at 25 cents per gallon which is right in the middle compared to fuel tax in other states. Diesel, on the other hand, has a much higher state gas tax at 49.20 cents per gallon.
Connecticut retirement tax
It’s plain to see why retirees might be drawn to the peaceful lifestyle and beautiful scenery in Connecticut, but how attractive are retirement tax rates in Connecticut?
Well, the tax burden for retirees is reasonably high in Connecticut. All forms of retirement income – including Social Security – are taxable in Connecticut. Income from 401(k)s, 403(b)s, and other retirement accounts are taxed as regular income, so you’ll pay between three and 6.99 percent.
The bottom line
The New England states have a reputation for a higher cost of living, and the state taxes in Connecticut could certainly contribute towards that.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.