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2020 Increase to Subtraction Modification of Pension and Annuity Income

For the 2020 tax year, Connecticut’s individual income tax return includes a subtraction modification of 25% for Teachers’ Retirement System income (CT-1040, Line 45), and a subtraction modification of 28% for pension and annuity income (CT-1040, Line 48b), which may be available to the extent the income is properly included in federal Adjusted Gross Income (AGI) for federal income tax purposes, and subject to prescribed income thresholds.

Teachers whose filing status is single, married filing separately, or head of household with federal AGI for the taxable year of less than $75,000, or teachers whose filing status is married filing jointly with federal AGI of less than $100,000, and receive income from certain pensions and annuities, such as from a defined benefit plan, 401(k), 403(b) or 457(b) plans, and who meet the other criteria, are eligible to claim the 28% of pension and annuity subtraction modification.

Taxpayers may not claim the Teachers’ Retirement System income subtraction modification and the pension and annuity income subtraction modification for the same income. See the CT-1040 Connecticut Resident Income Tax Return Instructions and contact your tax advisor to determine how these provisions apply to your individual circumstances.

The Teachers’ Retirement Board does not provide tax, legal or accounting advice.  This material has been prepared for informational purposes only.

If you have questions on your Connecticut tax obligation, please contact the Department of Revenue Services at 1-800-382-9463 (in CT) or 1-860-297-5962 (from anywhere) or visit their website at portal.ct.gov/drs.