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HB 5148

AN ACT CONCERNING THE DEDUCTION AND WITHHOLDING OF PERSONAL INCOME TAX FROM PENSION PAYMENTS AND ANNUITY DISTRIBUTIONS.

2025 Regular Session Introduced by Devin Carney

Connecticut bill establishes optional income tax withholding from pension and annuity distributions to prevent year-end tax liabilities for retirees.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#annuities #incometaxexemptions(state) #pensions
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Bill Summary · HB 5148

Legislative bill overview

HB 5148 would establish procedures for the deduction and withholding of Connecticut personal income tax from pension payments and annuity distributions. The bill creates a framework allowing taxpayers to have state income taxes withheld from these retirement income sources, similar to federal tax withholding mechanisms already in place. This addresses a gap where recipients of pensions and annuities may owe Connecticut income tax but lack an automatic withholding mechanism.

Why is this important

Many Connecticut residents receive pension and annuity income but may not have taxes withheld, creating potential tax liability surprises and underpayment penalties. Establishing a withholding system provides recipients with the option to avoid large tax bills at year-end and helps the state collect taxes more evenly throughout the year. This is particularly relevant as Connecticut's aging population increasingly relies on retirement income sources.

Potential points of contention

  • Retiree preference concerns: Some retirees may prefer to manage their own tax planning and view mandatory withholding options as government overreach or an unnecessary reduction in their monthly income
  • Competitiveness with other states: Connecticut's withholding requirements could make the state less attractive for retirees compared to states with more favorable pension tax treatment, potentially affecting migration patterns
  • Administrative burden on pension administrators: Requiring pension and annuity payment entities to implement state-specific withholding procedures adds operational complexity and costs that may be passed to recipients

Compiled from official sources — confirm details with the bill’s official record.

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