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Connecticut · 2027 and beyond
Connecticut in 2027 and beyond: what is already law, and what is still open
No tax measure on the ballot. The 2026 return finishes the IRA phase-in; National Guard pay becomes exempt in 2027. What is on the 2026 return, what starts with tax year 2027, and what is scheduled or conditional after that.
By Charles Trautman, EA, editor
Need to Know Tax · written from Connecticut Department of Revenue Services (DRS) sources and the unofficial November 3 election returns, November 12, 2026 · not yet reviewed by a Connecticut practitioner
No tax measure on the ballot. The 2026 return finishes the IRA phase-in; National Guard pay becomes exempt in 2027. This page keeps apart three things that get mixed together in the news: what is on the 2026 return you file in early 2027, what begins with tax year 2027, and what is scheduled, conditional or still undecided after that. Election figures are the unofficial November 3, 2026 returns and are not final until the state certifies them.
What the voters decided on November 3, 2026
No statewide tax measure was on the November 3, 2026 ballot in Connecticut. Nothing voted on that day changes a Connecticut return.
This return, next year, and later
| When | What applies |
|---|---|
| The 2026 return, filed in early 2027 | The last step of the IRA subtraction phase-in applies. |
| None of the federal deductions for tips, overtime, seniors or car-loan interest reaches Form CT-1040. | |
| Mandatory withholding on lump-sum retirement distributions stays suspended. | |
| The estate and gift tax line is $15,000,000, tracking the federal amount. | |
| Starting with tax year 2027 | National Guard active-service pay is exempt beginning with tax year 2027 (Public Act 26-130). |
| The lump-sum withholding suspension runs through December 31, 2027. | |
| Towns may adopt a $50,000 exemption on a primary home beginning with the October 2027 grand list. | |
| The estate and gift figure follows the indexed federal amount. | |
| 2028 and later, or conditional | The 2027 session decides what happens to the child tax credit proposal, the tips and overtime exemption and the property tax credit. |
Items under 2027 and later do not change the 2026 return. They matter for 2027 withholding, estimated payments and planning. The detail behind each line is in the other Connecticut articles.
The 2025 federal law and the Connecticut return
Connecticut uses the Internal Revenue Code for one purpose: defining federal adjusted gross income, line 1 of Form CT-1040. The new federal deductions come off after that line, so they have no effect here. The corporation tax was decoupled from the new production-property write-off.
That is the reason a change on the federal return, such as the deductions for tips, overtime and people 65 and older, may or may not show up on the Connecticut return. The federal side is in The new deductions for tips, overtime and seniors.
What to watch
The 2027 session and the budget due in June 2027. When something on this page changes, the change is logged on the updates page with its date.
What to bring
- Your 2026 federal and Connecticut returns, once filed, to set 2027 withholding and estimated payments against them
- Your last pay stub of 2026 and the first of 2027, to see whether withholding changed
- Any notice from the state about a 2027 rate, credit or filing change
Questions people ask
Does anything here change the Connecticut return I file in early 2027?
Only what is listed under the 2026 return. Everything listed under 2027 or later affects withholding, estimated payments and planning, not the return for 2026.
How will I know if this page changes?
Every change is logged on the updates page with its date and the article it affects. State legislatures meet in early 2027 and some act before the filing deadline.
Connecticut, after the election
No tax measure on the ballot. The 2026 return finishes the IRA phase-in; National Guard pay becomes exempt in 2027.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Sources and where to check
- DRS: 2025 Legislative Overview, Income Tax (EITC $250, family child care home credit, farm investment credit, lump-sum withholding, convenience-rule credit)
- Office of Legislative Research: 2026 Acts Affecting Taxes (PA 26-35, 26-68, 26-114, 26-130)
- Shipman & Goodwin: 2026 Connecticut Tax Developments (section references and effective dates)
- Office of Legislative Research Report 2025-R-0152: Connecticut Income Tax Treatment of Retirement Income (pension and IRA phase-down table, IRA phase-in by year)
- Office of Legislative Research Report 2026-R-0106: State Taxation of Social Security Benefits (July 30, 2026)
- DRS: Connecticut Earned Income Tax Credit (40%, $250 bonus, 2025 maximums)
- Office of the Governor, February 2025: proposal to raise the property tax credit to $350 (not enacted; current $300 rules)
- Connecticut General Assembly: HB 5010 (2026) bill status, tips and overtime exemption
- DRS TPG-211: Withholding Calculation Rules effective January 1, 2024 (Tables A through E)
- Ballotpedia: Connecticut elections, 2026 (no statewide ballot measures)