CT Tax Cuts on Social Security and Retirement Income: What you need to know before filing your taxes
January 9, 2020Thanks to a bipartisan budget passed back in 2017, a Republican proposal to reduce taxes on retirement income and Social Security is now in place in CT and will impact 2019 tax returns.
Retirees making $75K or less and couples making $100k or less per year are now fully exempt from state income tax on Social Security.
These same seniors will see an increasing amount of their pension income exempted from state income tax each year until 2025 when their pension income will be fully exempt.
DRS has released Connecticut Resident Income Tax Return Instructions for 2019, including guidance on the senior tax breaks. You can read it online here: https://portal.ct.gov/-/media/DRS/Forms/2019/Income/CT-1040-Online-Booklet_1219.pdf?la=en (see page 4, 26, and 28).
Last year, Gov. Lamont and Democrat lawmakers were actually considering REPEALING these promises made to Connecticut retirees.
It’s great news that at the end of the day the tax breaks Republicans fought to include in the bipartisan budget two years ago are remaining in place as promised.
How could this change impact you? Below is one example from the DRS guidance. You can read more here.
DRS Example: Anna’s filing status on her Connecticut resident return is single. She receives $30,000 from the Teachers’ Retirement System and $38,000 in pension payments from XYZ Corporation for the taxable year. Both amounts are includible in Anna’s federal gross income, and her federal AGI is less than $75,000. On the Connecticut return for the taxable year, Anna may subtract $7,500 ($30,000 x 25%) on Line 45, Schedule 1, Form CT‑1040, and $5,320 ($38,000 x 14%) as a pension and annuity income subtraction modification on Line 48b, Schedule 1, Form CT‑1040.
Need help? Click here for the Department of Revenue Services’ Free Income Tax Assistance.
More tax resources also available at https://portal.ct.gov/TSC.