Connecticut Has a Reputation for High Taxes. A Retiree in New Haven at 66 With $1.2 Million May Pay Less Than Expected
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A common argument for New Haven retirees is to sell the house, move to Florida, and stop paying Connecticut taxes. The hope is that plenty of people take that advice and retire somewhere warm. In IRS migration data for 2022 to 2023, Florida was the top destination by income for people leaving Connecticut, drawing $1,210,370,000 in adjusted gross income.
However, staying in Connecticut has its own plusses and minuses, as a single 66-year-old in New Haven with $1.2 million saved can owe Connecticut nothing in income tax, which is a definite plus. However, the state still finds a way to get paid, though. It just collects through the property tax bill.
Connecticut’s Retirement Exemptions Do the Heavy Lifting
The rules are kinder than the state’s reputation. If your federal adjusted gross income (AGI, the income figure on your federal return) is under $75,000 as a single filer, Connecticut exempts all of the Social Security that’s taxable federally, per Conn. Gen. Stat. § 12-701(a)(20)(B)(x)(III). Above that line, the state can tax at most 25% of your benefits.
Traditional IRA withdrawals got the same treatment. Starting in 2026, single filers under $75,000 can deduct all of them. The deduction then steps down to 85% at $75,000, 70% at $77,500, and zero at $100,000. Pensions run on the same schedule. On top of that, single filers get a $15,000 personal exemption, and it starts phasing out once Connecticut AGI passes $30,000. Rates begin at 2% on the first $10,000 of taxable income.
Running a Typical Withdrawal Mix Through the Rules
Say $900,000 sits in a traditional IRA and $300,000 sits in a taxable account. A 4% draw comes to $48,000. That’s $40,000 from the IRA plus $8,000 in dividends and interest. Add Social Security at the average retired-worker benefit of $2,170 a month after the 2027 COLA, which works out to $26,040 a year. Gross income lands at $74,040.
Federally, $22,134 of that Social Security is taxable, which sets federal AGI at $70,134. That’s under the line, so both the Social Security and the IRA money drop out. What’s left in Connecticut AGI is the $8,000 of dividends, and the $15,000 exemption covers all of it. Connecticut income tax comes to zero.
Now pull $8,000 more from the IRA. Federal AGI rises to $78,134. Connecticut now picks up $6,510 of your Social Security plus 30% of the IRA withdrawal. Connecticut AGI comes to $28,910, and the tax is about $376 before credits. That is a modest amount. The trouble is that each extra dollar from here strips away more of the deduction.
Property Tax Is Where Connecticut Collects
Connecticut ranks 50th on property tax in the 2025 State Tax Competitiveness Index. Its statewide cost-of-living index sits at 103.61, a bit above the typical U.S. level. In New Haven, homes sold for a median of $400,000 over the three months ending in September. Towns assess homes at 70% of market value, and New Haven’s adopted mill rate for fiscal 2026-27 is 39.962. At that rate, a $400,000 house costs about $11,989 a year in property tax. Connecticut’s senior homeowner relief programs carry income limits that may exclude this retiree.
| Monthly Item | Amount |
|---|---|
| Gross income | $6,170 |
| Property tax | $956 |
| Medicare Part B | $202.90 |
| Medigap Plan G (range) | $246 to $462 |
| Left for food, utilities, insurance, maintenance, car, federal tax | About $4,657 |
That works, but there isn’t much slack. Older homes and winter heating can add maintenance and utility costs. On the plus side, you live near Yale’s lectures, a major teaching hospital, the shoreline, and train service to New York and Boston. The estate tax, which comes up in every Florida sales talk, applies only to estates over $15 million.
Keep Federal AGI Under $75,000
Inflation deserves a look too. Prices for households 62 and older rose 3.9% over the past year, while the new COLA is 3.6%. Over time, more of your spending has to come from the portfolio.
In this case, the retiree holds $1.2 million in a mix of index funds and a treasury ladder, withdraws around 4% (about $48,000), and budgets roughly $11,500 a year for property tax. That keeps the budget affordable over a 66-year-old’s time horizon (the 4% figure comes from research done decades ago, and a free guide here, The 4% Rule Is Broken, makes the case for an income-first alternative). Funding big purchases from the taxable account keeps IRA withdrawals from driving federal AGI over the line. Taking Social Security or converting IRA money to a Roth each raises AGI, so the size of each move matters.
A pricier house would raise the property tax bill. Connecticut is expensive, but its exemptions can leave this retiree’s income untaxed by the state. The number to watch each year is whether federal AGI stays under $75,000.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
