Catch Up Begins September 15^th for Estimated Income Tax Payments

Hartford – The Connecticut Department of Revenue Services (DRS) today reminded employers that new income tax withholding rates and catch-up provisions take effect Monday, August 1, 2011. The agency also released information and tax calculation schedules for taxpayers who make estimated income tax payments and are affected by the new income tax changes beginning with the next quarterly payment due by September 15, 2011.

DRS Commissioner Kevin B. Sullivan noted that the impact of the tax increases for low and medium income earners is relatively minor. Many taxpayers will see no change in their withholding or estimated payments.

Commissioner Sullivan said, “Single filers who earn $50,000 a year or less, and married filers who earn $100,000 a year or less will not see a change in their taxes. The new rates apply to taxpayers earning higher incomes. In fact, even for a couple annually earning $100,000 and filing jointly, the weekly amount of additional catch-up withholding will be around $7.00.  At the same time, wage-earners will continue to see what is essentially a 2% break on wages up to $106,000 due to a cut in federal Social Security withholding that began last February. Consequently, most Connecticut wage-earners with income tax withholding will see no decrease and perhaps an increase in take-home pay.  That said, higher wage-earners will see a bigger bite in withholding taxes.  For a couple annually earning $150,000 and filing jointly, the added tax withheld each week for the rest of the tax year will be around $47 and at $250,000 around $110.”

“Of course,” added Commissioner Sullivan, “withholding and quarterly payments will be reduced after January 1, 2012 when the tax will be collected as usual based on a full payment year.”

Connecticut’s new income tax rates are: 3%, 5%, 5.5%, 6%, 6.5% and 6.7%.

The increased rates begin with the 5.5% rate and are applied to adjusted gross income levels:

• Over $100,000 filing jointly
• Over $50,000 filing single
• Over $80,000 filing as head of household
• Over $50,000 married filing separately

Additionally, the new tax rates contain a phase out the 3% rate for taxpayers at certain Connecticut adjusted gross income levels. Those are:

• Over $100,500 filing jointly
• Over $56,500 filing single
• Over $78,500 filing as head of household
• Over $50,250 married filing separately

The income excluded from the 3% rate will be taxed at the 5% rate.

Commissioner Sullivan said that the new income tax withholding tables were completed and disseminated by the DRS “in record time in mid-May, within just two weeks after legislative enactment of the tax changes.” 

The 2011 catch-up withholding tables, as well as instructions and calculation schedules for estimated income tax payments can be found on the DRS website under 2011 Legislative Updates.

Media calls should be directed to the communications office at (860) 297-5610 or by email at mailto:sarah.kaufman@po.state.ct.us.