Connecticut Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Remote Workers and Multi-State Taxation

Living in Connecticut, Working for an Out-of-State Employer

As a Connecticut resident, you owe Connecticut income tax on all income from all sources — regardless of where your employer is located or where the work is performed.

What this means:

• Your employer’s state does NOT determine your Connecticut tax obligation
• Income earned for a California employer while working from your Connecticut home is fully taxable in Connecticut
• Connecticut law requires proper Connecticut income tax withholding for resident employees

Example: A Connecticut resident working remotely full-time for a Massachusetts company owes Connecticut income tax on 100% of that income.

However: If you also owe income tax to the state where your employer is located (or where you physically work), Connecticut allows a credit for taxes paid to qualifying jurisdictions (Schedule 2) to prevent full double taxation.

Source: https://portal.ct.gov/DRS/Individuals/Individual-Tax-Page/Resident-Working-in-Another-State

Working in Connecticut, Living in Another State

Non-residents who perform work physically in Connecticut owe Connecticut income tax on income earned from Connecticut sources.

Physical presence rule: Income is sourced to Connecticut based on where the services are physically performed. A Massachusetts resident whose employer is in Connecticut but who physically works in Massachusetts owes no Connecticut income tax.

Example: A Rhode Island resident who works partly in Connecticut and partly in Rhode Island owes Connecticut income tax only on the Connecticut-apportioned portion of wages.

Source: https://portal.ct.gov/drs/withholding-taxes/nonresidents-who-work-in-connecticut

⚠️ Interstate Tax Risk Indicator — Connecticut-Specific Risks

Connecticut residents face heightened multi-state complexity with these states:

New York — “Convenience of the Employer” Rule (HIGH RISK): New York applies a “convenience of the employer” rule: if you work from home in Connecticut for a New York employer, New York may tax that income as if worked in New York — unless working remotely is a “necessity of the employer.” Connecticut does NOT accept this rule for its own residents (Connecticut taxes by physical presence). This creates a risk of effective double taxation: you owe Connecticut tax on all your income, and New York claims to also tax the same income. Connecticut offers a credit for New York tax paid (Schedule 2), but because the credit is limited to the Connecticut tax attributable to that income, residual double taxation can occur.

New for 2025 — Challenge Credit: Connecticut enacted a new credit for residents who successfully challenge New York’s convenience rule, allowing a 60% credit for the resulting Connecticut tax increase. This is a partial mitigation, not a complete solution.

New York City — Additional Complexity: NYC levies its own local income tax. When computing the Connecticut credit for taxes paid to other jurisdictions, Connecticut uses a specific methodology for income taxed by both New York State and NYC. Special Notice SN 92-2 explains the allocation between columns on Schedule 2.

Source: https://portal.ct.gov/DRS/Publications/Special-Notices/1992/SN-92-2

Massachusetts — Telecommuter Rule: Massachusetts has historically sought to tax income of non-residents working remotely for Massachusetts employers. Connecticut residents working for Massachusetts employers should monitor current Massachusetts DOR guidance.

Pennsylvania — Local Tax Complexity: Pennsylvania has over 2,600 local income tax jurisdictions. Connecticut residents working in Pennsylvania may face both Pennsylvania state tax and local Earned Income Tax obligations; both are creditable against Connecticut tax (subject to the lesser-of calculation).

California — Aggressive Residency Audits: California aggressively pursues former residents who claim to have left. Connecticut residents who were previously California residents should maintain clear evidence of Connecticut domicile.

Source: https://portal.ct.gov/DRS/Individuals/Individual-Tax-Page/Resident-Working-in-Another-State

“Convenience of the Employer” Rule — Connecticut’s Position

Connecticut does NOT apply a “convenience of the employer” rule for its own taxation of non-residents.

Connecticut’s rule: Non-residents are taxed only on income from services physically performed in Connecticut. If a New York resident works from home in New York for a Connecticut employer, that person owes no Connecticut income tax — even though the employer is in Connecticut.

However: Connecticut IS affected by other states’ (particularly New York’s) application of this rule against Connecticut residents working remotely.

Source: https://portal.ct.gov/drs/withholding-taxes/nonresidents-who-work-in-connecticut

Reciprocal Agreements

Connecticut does not have reciprocal income tax agreements with any state.

This means:

• Connecticut residents who physically work in other states must file in both states
• Non-residents who work in Connecticut must file a Connecticut non-resident return
• Credits for taxes paid to other jurisdictions are the mechanism for avoiding double taxation (Schedule 2 of Form CT-1040)

Source: https://portal.ct.gov/DRS/Individuals/Individual-Tax-Page/Resident-Working-in-Another-State

Multi-State Tax Filing for Connecticut Residents

When earning income in multiple states:

1. File Form CT-1040 (resident return) reporting all income from all sources
2. File non-resident returns in the other states where you earned income
3. Claim a credit on your CT-1040, Schedule 2 for income taxes paid to the other states
4. The credit is the lesser of (a) tax paid to the other state or (b) the Connecticut tax attributable to the out-of-state income

Forms:

• Form CT-1040, Schedule 2: Credit for Income Taxes Paid to Qualifying Jurisdictions
• Attach a copy of each out-of-state return with your CT-1040

Source: https://portal.ct.gov/DRS/Individuals/Individual-Tax-Page/Resident-Working-in-Another-State