Connecticut Does Not Tax Military Retired Pay

Connecticut income tax starts from federal adjusted gross income and then applies subtraction modifications. Military retirement pay that was included in federal adjusted gross income is subtracted in full, so the Connecticut tax on it is zero. There is no percentage phase-in, no age condition, and no income cap on the military retirement subtraction, which distinguishes it from the partial exclusions several neighbouring states use. Survivor Benefit Plan, Reserve Component Survivor Benefit Plan, and Retired Serviceman's Family Protection Plan annuities are likewise not subject to Connecticut income tax. VA disability compensation, VA pension, and Dependency and Indemnity Compensation are not included in federal adjusted gross income in the first place. They therefore never appear on the Connecticut return and need no subtraction. A veteran whose entire income is VA compensation has no Connecticut taxable income from it. Military disability retirement pay received as a pension, annuity or similar allowance for personal injury or sickness resulting from active service is treated the same way. The 2026 session added three related subtractions. Retirement pay of a retired commissioned officer of the U.S. Public Health Service, a uniformed service, is deductible from tax years beginning January 1, 2026 (Public Act 26-68, section 277); NOAA Corps retired pay is not named. Compensation for serving on an honor guard detail at a veteran's funeral is exempt from the 2026 tax year (Public Act 26-35, section 18). And pay a National Guard member receives for being ordered out for active service is exempt from the 2027 tax year (Public Act 26-35, section 19). Check that the Department of Revenue Services' forms for the year carry the new lines before filing. Two items that are not the same question. Active duty pay of a Connecticut resident is generally taxable by Connecticut unless a federal exclusion applies, and the combat zone exclusion that removes base pay, hostile fire and imminent danger pay, and certain bonuses from federal gross income carries through to Connecticut because Connecticut starts from the federal figure. A service member serving in a combat zone also gets the federal 180-day filing extension for the Connecticut return. A service member who dies while serving in a combat zone is exempt from Connecticut income tax for the year of death, and tax already paid for that year is refunded to the estate or survivor. That refund has to be claimed. Because the subtraction runs through the return rather than through an application, there is no form to file with the Department of Veterans Affairs and no certificate to obtain. Keep the Form 1099-R and, if a combat zone exclusion is involved, the orders. The current year's subtraction line and instructions are on the Department of Revenue Services site, and that is the source to check rather than any summary, because line numbers move between filing seasons.