Payroll Tax in Connecticut: Complete Guide 2026
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Payroll Tax in Connecticut: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Connecticut’s payroll tax system combines a graduated state income tax with mandatory contributions to the CT Paid Leave program, standard unemployment insurance, and several smaller employer assessments. The CT Paid Leave program, which launched premium collection in ~2021 and began paying benefits in ~2022, adds a meaningful employee-side payroll deduction on top of Connecticut’s already substantial income tax withholding rates.
Connecticut Payroll Tax Rates (2026)
| Tax | Rate | Paid By | Wage Base |
|---|---|---|---|
| State Income Tax Withholding | ~2.00% to ~6.99% (graduated) | Employer withholds from employee | All taxable wages |
| State Unemployment Insurance (SUI) | ~1.7% to ~6.8% | Employer | First ~$15,000 per employee |
| CT Paid Leave (PFML) | ~0.50% | Employee | Social Security wage base (~$168,600) |
| Federal FICA — Social Security | ~6.2% each | Employer + Employee | First ~$168,600 |
| Federal FICA — Medicare | ~1.45% each | Employer + Employee | No cap |
| Additional Medicare (high earners) | ~0.9% | Employee only | Wages over ~$200,000 |
Connecticut’s graduated income tax has ~7 brackets, with the top marginal rate of ~6.99% applying to income above approximately ~$500,000 for single filers and approximately ~$1,000,000 for joint filers.
How Connecticut Payroll Tax Works
State Income Tax Withholding
Connecticut’s progressive income tax starts at approximately ~2.00% and rises through ~7 brackets to a top rate of approximately ~6.99%. Employers withhold based on the employee’s Form CT-W4 filing status and the state’s withholding tables. A ~3% tax benefit recapture provision effectively raises rates for higher earners, and a personal tax credit phases out for taxpayers with Connecticut adjusted gross income above approximately ~$56,500 (single) or ~$100,500 (joint). The complexity of these phase-outs makes accurate withholding tables essential.
CT Paid Leave (PFML)
The CT Paid Leave program provides eligible employees with up to ~12 weeks of paid leave for qualifying family and medical reasons, including bonding with a newborn, caring for a family member with a serious health condition, and organ or bone marrow donation. The premium is approximately 0.50% of wages up to the Social Security wage base ($168,600) and is paid entirely by the employee. Employers are responsible for withholding and remitting the premium. The maximum weekly benefit is projected at approximately ~$981, which is ~60 times the state minimum wage. Unlike Massachusetts and Washington, the employer pays no share of the CT Paid Leave premium.
State Unemployment Insurance (SUI)
Employers pay SUI on the first approximately ~$15,000 of each employee’s annual wages. New employers are assigned a standard rate of approximately ~3.0%. Experience-rated employers see rates ranging from approximately ~1.7% to ~6.8%, depending on their benefit ratio. Connecticut also assesses a fund balance adjustment that can increase effective rates during periods when the unemployment trust fund is depleted.
Other Employer Assessments
Connecticut imposes several smaller assessments on employers, including a workforce development surcharge and an administrative assessment, which can add approximately ~0.05% to ~0.10% to the effective SUI rate. These assessments fund job training programs and administrative costs for the Department of Labor.
Comparison to Neighboring States
| Metric | Connecticut | Massachusetts | New York | Rhode Island | National Avg. |
|---|---|---|---|---|---|
| State income tax top rate | ~6.99% | ~9.00% (with surtax) | ~10.9% | ~5.99% | Varies |
| SUI taxable wage base | ~$15,000 | ~$15,000 | ~$12,800 | ~$29,200 | ~$16,000 |
| PFML premium | ~0.50% (employee only) | ~0.88% (shared) | ~0.50% (employee only) | ~1.1% (employee) | ~0.4% |
| Est. total employer cost per ~$50K employee | ~$5,300 | ~$5,600 | ~$5,500 | ~$5,000 | ~$4,300 |
Connecticut’s employer costs are elevated by the high state income tax and SUI, though the fact that PFML is fully employee-funded provides some employer-side relief relative to Massachusetts.
Tips for Minimizing Payroll Tax Burden
- Leverage the employee-funded PFML structure. Unlike some neighboring states, the CT Paid Leave premium is ~100% employee-paid. Ensure accurate withholding to avoid employer liability for missed collections.
- Manage SUI experience ratings. With rates reaching ~6.8% plus surcharges, reducing turnover and contesting improper claims can generate meaningful savings.
- Use accurate withholding tables. Connecticut’s ~7 brackets, recapture provisions, and credit phase-outs create withholding complexity. Use updated tables from the Department of Revenue Services.
- File and pay electronically. Connecticut’s myconneCT portal provides streamlined filing for income tax withholding, SUI, and CT Paid Leave premiums.
- Monitor fund balance surcharges. During periods of high unemployment, Connecticut adds surcharges to SUI rates. Budget for potential increases during economic downturns.
- Plan for CT Paid Leave absences. Understanding the ~12-week leave structure helps with staffing plans and coverage arrangements.
- Track the personal tax credit phase-out. For employees with income near the phase-out thresholds (~$56,500 single / ~$100,500 joint), small wage changes can trigger noticeable withholding adjustments.
Key Takeaways
- Connecticut’s graduated income tax ranges from ~2.00% to ~6.99% across ~7 brackets, with recapture provisions that increase effective rates for higher earners
- CT Paid Leave premiums of ~0.50% are paid entirely by the employee, with employers responsible only for withholding and remittance
- SUI rates range from ~1.7% to ~6.8% on the first approximately ~$15,000 of each employee’s wages, with additional surcharges possible
- The CT Paid Leave program provides up to ~12 weeks of paid leave with a projected maximum benefit of approximately ~$981 per week
- Connecticut’s total employer cost per ~$50,000 employee is estimated at approximately ~$5,300, above the national average
- Electronic filing through myconneCT is recommended for all payroll tax obligations
Next Steps
- See the full state picture at Taxes in Connecticut: State Tax Guide 2026
- Compare state tax burdens at State Income Tax Rates Comparison 2026
- Learn about federal payroll obligations in the Self-Employment Tax Guide
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Get local help: Find a CPA Near You