Residents of Connecticut Receiving Income from Pensions or Annuities:
- Effective January 1, 2018, payers that maintain an office or transact business in CT and make payments of taxable pensions or annuity distributions to Connecticut residents, are required to withhold income tax from such distributions. Resident recipients need to file Form CT-W4P, Withholding Certificate for Pension or Annuity Payments, with their pension payer so that the correct amount of tax is withheld. If the form is not filed with the payer, the payer will withhold at a rate of 6.99%.
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.