When a 5.5% Bracket is Really a 14.1% Bracket: Connecticut Income Taxes

Posted on June 8, 2020 · Posted in Blogs, Financial Planning, Retirement Planning

Connecticut income tax rates range from 3% to 6.99%. While 6.99% is the published “maximum,” you may find yourself paying a much higher marginal rate.  A marginal tax rate is the amount you pay on an additional dollar of income.  So, how can you pay more than the Connecticut maximum of 6.99%?  Check out the table below.  This shows what happens if you file “Married Filing Jointly” and your income increases in $1,000 increments between $93,000 and $104,000 (it also applies to other filing methods at different income amounts).  

You start off paying the published rate of 4.5% but then it something happens.  Because you lose your exemption, you will be taxed by the state of Connecticut at an 8.9% rate for the extra $1,000 of income above $96,000.  But it gets worse.  The rate keeps going up until you’re paying 14.1% on income between $100,000 and $101,000.  Above $102,000, you go back to paying the published rate.


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