DRS: Pension Income


Pension Income

Residents of Connecticut Receiving income from pensions or annuities:

  • Income Tax Applies to Pensions Received by Residents of Connecticut - Pension and annuity benefits received by Connecticut residents are subject to Connecticut income tax to the extent that these benefits are includable in federal adjusted gross income for federal income tax purposes.  Connecticut income tax applies even if the pension is paid by a former employer located in another state.  Resident recipients may (but are not required to) have income tax withheld from their pension or annuity payments by completing Form CT-W4P, Withholding Certificate for Pension or Annuity Payments, and returning it to the pension payer.  
  • There is No Exemption from State Tax for Retired State Employees Who are Residents of Connecticut - Connecticut does not exempt from State income tax the pensions paid to retired employees of the State of Connecticut; therefore, it does not exempt from Connecticut income tax the pensions paid to residents of Connecticut who are retired employees of other States or the Federal government. 
  • Withholding from Pension Income is Not Required - Because withholding from pensions and annuities is voluntary, a taxpayer may prefer to use Form CT-1040ES, Individual Estimated Income Tax Coupon, to make quarterly payments.   

Nonresidents of Connecticut Receiving Pensions Paid by Former Connecticut Employers:

  • Pension and annuity benefits from federally qualified or nonqualified pension or retirement plans paid to nonresidents of Connecticut are not subject to Connecticut income tax. 

  • Nonresidents who worked in Connecticut are subject to Connecticut income tax on Connecticut source income, including but not limited to back wages, unemployment compensation benefits, severance payments, accrued vacation and accrued sick pay.

  • Please refer to our regulations for information on the taxation of nonresidents with income from Incentive stock options, Nonqualified stock options, and Nonqualified deferred compensation.