The Roth series · Connecticut · By Rich LoPresti, CFP®
Connecticut Roth conversions: the retirement-income phaseout worth checking.
Connecticut allows an income-based subtraction for eligible IRA and pension income. Then it takes the exemption away, in steps, as income rises. A Roth conversion that stops inside those steps can cost far more than the federal bracket suggests.
The short answer. For 2026, a married couple filing jointly can subtract eligible federally taxable traditional IRA distributions and pension income when federal adjusted gross income is below $100,000. The subtraction declines in steps from $100,000 and disappears at $150,000. The taxable portion of a traditional-IRA-to-Roth conversion increases federal AGI and is included in the IRA distribution amount used for this subtraction. Crossing a step can reduce the subtraction on other eligible retirement income too. For single filers, the phaseout starts at $75,000 and reaches zero at $100,000. Compare conversion sizes on both sides of a threshold—but do not convert more simply to clear the band.
What Connecticut exempts, and when.
Three kinds of retirement income get special treatment on the Connecticut return, with different rules. The first two share a phaseout schedule; Social Security has a separate adjustment:
| Income | Married filing jointly | Single |
|---|---|---|
| Eligible traditional IRA distributions (including the taxable part of traditional-IRA-to-Roth conversions) | Fully exempt under $100,000 of federal AGI; phases out to zero at $150,000 | Fully exempt under $75,000; phases out to zero at $100,000 |
| Eligible pension and annuity income | Same schedule | Same schedule |
| Social Security | Fully exempt under $100,000; at or above that, the taxable amount is generally capped at the smaller of federally taxable benefits or 25% of total benefits | Fully exempt under $75,000; at or above that, the taxable amount is generally capped at the smaller of federally taxable benefits or 25% of total benefits |
2026 law: the eligible IRA subtraction reaches 100% before applying the income phaseout. Special rules apply to military, railroad and Connecticut teachers’ retirement income; do not assume all pensions use this table. Connecticut General Statutes §12-701 and the DRS phaseout worksheet describe the rules. The DRS worksheet references the 2025 IRA percentage; use the statute’s 100% starting percentage for 2026. Dollar thresholds are not automatically indexed for inflation.
Why the band is worse than it looks.
The phase-out isn't a smooth slope. It's a staircase, and each step applies to all of your eligible federally taxable IRA and pension income, not just the dollars that crossed the line.
| Federal AGI, married filing jointly | Share of IRA and pension income exempt |
|---|---|
| Under $100,000 | 100% |
| $100,000 – $104,999 | 85% |
| $105,000 – $109,999 | 70% |
| $110,000 – $114,999 | 55% |
| $115,000 – $119,999 | 40% |
| $120,000 – $124,999 | 25% |
| $125,000 – $129,999 | 10% |
| $130,000 – $139,999 | 5% |
| $140,000 – $149,999 | 2.5% |
| $150,000 and over | 0% |
Tax-law arithmetic · one step on the staircase
$5,000 more income, $14,000 more Connecticut adjusted gross income.
Illustration of how the exemption schedule works, using round numbers. Assume the added $5,000 is taxable interest, not another IRA distribution, and all other adjustments stay unchanged. The subtraction falls by $9,000, so Connecticut adjusted gross income rises by $14,000. This is not a $14,000 tax bill. Personal exemptions, credits, Social Security interactions and other rules are outside this example; a conversion would also change the eligible distribution amount.
That is the planning wrinkle: an income increase that crosses a step can expose more dollars to state tax than the added income alone. The effect is not uniform across the band. A federal bracket by itself does not show the full cost.
What this means for a Roth conversion.
The taxable portion of a traditional-IRA-to-Roth conversion is included in federal IRA income and federal AGI. Nondeductible basis can make part of a conversion nontaxable; confirm the amount on Form 8606. IRS Publication 590-A explains the federal reporting.
- Below the applicable AGI threshold: the eligible IRA amount can be fully subtracted for Connecticut in 2026. But a conversion can also increase federally taxable Social Security or affect other tax provisions; do not assume the entire state bill is unchanged.
- Inside the phaseout band: part of the eligible distribution remains taxable, and crossing a step reduces the subtraction on other eligible retirement income.
- At or above the upper threshold: this subtraction is gone. Additional income no longer erodes it, but federal tax, state rates and other phaseouts still matter. A lower marginal cost on the next dollar does not make a larger conversion cheaper in total.
Compare no conversion, a smaller conversion and a larger one. Check the thresholds, federal brackets, Medicare or Marketplace costs, cash reserves and expected future withdrawals. A conversion that lands inside the band can still be appropriate. The goal is a better household outcome, not avoiding a band at any price.
The same thresholds can matter later in retirement.
The $100,000 line isn't only a conversion issue. Once both Social Security checks are on and required withdrawals have started, federal AGI affects both the IRA subtraction and the separate Social Security adjustment. Staying under it can matter every year for the rest of your life, and a Roth is the account that lets you do it: qualified Roth withdrawals don't raise federal AGI, so they don't touch either exemption.
And because the thresholds aren't indexed, more households drift into the band each year as benefits and required withdrawals grow. The couple who clears it comfortably at 70 may not at 80.
Single filers: the line is $75,000.
When one spouse passes away, the survivor usually files single the following year, and Connecticut's thresholds drop with the federal ones: full exemption only under $75,000 of AGI, gone by $100,000. Nearly the same income, a lower line. It is the state's version of the widow's penalty, and a reason to compare planning while both spouses are alive—not an automatic reason to convert.
Bring it back to your plan
Four questions worth asking
- What will my federal AGI be in a gap year before any conversion, counting pension, interest and part-time work?
- How much room is there below $100,000, and is that enough to be worth doing?
- How do no conversion, a smaller conversion and a larger conversion compare after federal tax, state tax and healthcare effects?
- Once required withdrawals start, will I be under the line, over it, or in the band?
What this article does not show.
Worth being explicit, because an article like this can imply more than it should.
- It is not a recommendation to convert. The state exemption is one factor; the federal bracket, Medicare surcharges, cash to pay the tax and who inherits all weigh on the same decision.
- The illustration is round-number arithmetic from the published schedule, not an estimate of anyone's tax. Connecticut also has a personal exemption and credits that change where state tax actually begins.
- Thresholds and schedules can change. They are shown as they stand for 2026 returns.
- Other states differ. This article is specific to Connecticut residents.
Try it on your own dates
Is this worth a look for you?
Two minutes, eight questions, nothing saved. Or map the years between your last paycheck and your first required withdrawal.
Take the two-minute check → Map your conversion window →The timing
Why the years right after the paychecks stop are often the cheapest time to convert.
Read the article →The survivor's bracket
What happens to the tax bill when one spouse is left filing alone.
Read the article →A planning story
Two brackets, one pile of cash: how a couple chose their conversion size.
Read the story →Connecticut is where I work.
A discovery conversation can identify the Connecticut questions worth examining alongside your federal tax picture. A completed conversion analysis is a separate planning step. The complimentary meeting is for households with at least $750,000 in pretax retirement accounts.
Talk with Rich →Educational content written by Rich LoPresti, CFP®, drawing on recurring planning conversations with Connecticut households. It is not a client case study, testimonial or individualized recommendation. Reviewed October 9, 2026 using the Connecticut statute and DRS materials linked above. Figures reflect 2026 law and may change. DRS guidance for retirees explains the separate Social Security adjustment. The taxable portion of a Roth conversion is included in income in the year it occurs and cannot be recharacterized. Consult a qualified tax advisor. Retirement Approaching provides retirement-planning education. Advisory services are offered through Milestone Asset Management Group, LLC, an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. No investment result or tax savings is guaranteed.