Connecticut Payroll Tax Guide (2026)
Connecticut withholding runs from 2.00% to 6.99% across seven brackets, unemployment contributions apply to the first $27,000 of pay with a 1.9% new employer rate, and every worker gives up 0.5% of wages to the state paid leave trust until they hit the Social Security cap.[3]
Connecticut payroll at a glance
Connecticut employers handle three state payroll taxes: graduated income tax withholding and a 0.5% paid leave contribution, both deducted from employees, plus unemployment contributions that employers fund alone.[3]
What changed for Connecticut payroll in 2026
Five items moved for Connecticut employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 Connecticut payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
State income tax withholding is not included above: it depends on the employee’s Form CT-W4 and filing status, so it cannot be estimated from gross pay alone.
Payroll tax rates & the nexus question
Connecticut runs four state payroll taxes. The table below is the whole state layer for 2026.[3]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 1.10%–9.90%; 1.90% new | $27,000 |
| Fund solvency tax | Employer | 1.00% | $27,000 |
| Connecticut Paid Leave employee contribution | Employee | 0.50% | $184,500 |
| Income tax withholding | Employee | 2.00%–6.99% | No limit |
Charged rates normally run 0.1% to 10.0%. For 2026 only, each employer’s charged rate is divided by 1.125 to soften the wage base increase, which drops the maximum charged rate to 8.9%. A 1.0% fund solvency tax is then added to every employer, producing the 1.1% to 9.9% total range.[3]
Who has to register
Paying $1,500 or more in wages in a calendar quarter, or having one or more employees in each of 20 calendar weeks, in the current or preceding year. Agricultural employers use $20,000 in a quarter or 10 workers in 20 weeks, domestic service uses $1,000 in a quarter, and 501(c)(3) organizations use 13 weeks.[3] Income tax withholding is administered separately by Connecticut Department of Revenue Services, so most employers end up with two state account numbers, not one.
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in Connecticut generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
Confused by Connecticut’s payroll withholding & filing rules?
We handle registration, filings, and year-end forms so your team runs payroll without the guesswork.
Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[3]
How to register
- Cross the wage threshold→
- ReEmployCT→
- Receive account number→
- Annual Rate Notice, delivered electronically through ReEmployCT→
- File & deposit online
Paying $1,500 or more in wages in a calendar quarter, or having one or more employees in each of 20 calendar weeks, in the current or preceding year. Agricultural employers use $20,000 in a quarter or 10 workers in 20 weeks, domestic service uses $1,000 in a quarter, and 501(c)(3) organizations use 13 weeks.[3]
Deposit schedule
Set from the 12 month look back ending June 30: weekly remitter above $10,000, monthly remitter above $2,000 through $10,000, quarterly remitter at $2,000 or less.[1]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| Form CT-941 Connecticut Quarterly Reconciliation of Withholding, with payments… | Income tax withholding returns | Set from the 12 month look back ending June 30: weekly remitter above |
| Annual reconciliation | Year-end withholding reconciliation | January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[3]
Payroll Pricing
Simple, transparent pricing, no setup fees, no year-end surprises. One flat charge per pay run.
CROWNGLOBE
extra
extra
extra
extra
Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[3]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
- Wages subject to the employee-paid contributions listed above
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $27,000 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In Connecticut that is $27,000 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Connecticut Paid Leave employee contribution
- An employee-funded contribution withheld from pay at 0.50%. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
- Experience rating
- The method Connecticut Department of Labor, Unemployment Insurance Tax Division uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Form CT-W4
- The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Connecticut Department of Revenue Services.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Connecticut payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
Connecticut has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[14]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 1.90% | $27,000 |
| UI, experienced | 1.10%–9.90% | $27,000 |
| Fund solvency tax | 1.00% | $27,000 |
| Connecticut Paid Leave employee contribution, employee | 0.50% | $184,500 |
| Income tax, standard | 2.00%–6.99% | No limit |
Layer 3, county & city: no payroll tax, but a wage floor
No county or city in Connecticut levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.[10]
The state minimum wage is $16.94 an hour, effective 2026-01-01. The tipped cash wage is $6.38. No local ordinance sets a higher floor. No Connecticut municipality sets its own minimum wage. The tipped cash wage of $6.38 applies to hotel and restaurant wait staff; bartenders who customarily receive tips have a separate cash wage of $8.23 with an $8.71 tip credit. Indexed each January 1 to the federal employment cost index. The Labor Commissioner must announce any 2027 increase by October 15, 2026.[10]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA standard salary level, and only if the duties test is also met. Paying a salary is not by itself enough.[13]
Connecticut payroll FAQs
Connecticut runs seven brackets for 2026, from 2.00% on the first band of taxable income up to 6.99% above $500,000, with 4.5, 5.5, 6.0, 6.5 and 6.9% steps in between. Employees pick a withholding code on Form CT-W4, and the thresholds shift with that code. If an employee does not give you a completed CT-W4, Circular CT tells you to withhold at the highest marginal rate of 6.99%.
It stays at 0.5% of wages and is funded entirely by the employee, with no employer share. Deductions run until the worker reaches the Social Security contribution limit, which is $184,500 for 2026, so the maximum any one employee contributes is $922.50. Employers withhold it and remit it to the CT Paid Leave Authority.
Charged rates run from 0.1% to 10.0%, but for 2026 each rate is divided by 1.125, which caps the charged portion at 8.9%. A 1.0% fund solvency tax is then added to every employer, so total rates land between 1.1% and 9.9% on the first $27,000 of each worker’s wages. Employers with no experience history pay 1.9%.
Register once you pay $1,500 or more in wages in any calendar quarter, or have one or more employees in each of 20 calendar weeks, in the current or preceding year. Agricultural employers use a $20,000 quarterly payroll or 10 workers in 20 weeks, domestic service employers use $1,000 in a quarter, and 501(c)(3) organizations use 13 weeks. Registration and quarterly filing both run through ReEmployCT.
Total compensation must reach the $16.94 minimum wage. Hotel and restaurant wait staff can be paid a cash wage of $6.38 with a tip credit of $10.56, while bartenders who customarily receive tips get a cash wage of $8.23 with an $8.71 credit. If tips fall short in any week, the employer pays the difference.
Your schedule comes from the 12 month look back ending June 30. Liability above $10,000 makes you a weekly remitter, above $2,000 through $10,000 a monthly remitter, and $2,000 or less a quarterly remitter. Everyone files Form CT-941 quarterly and reconciles the year on Form CT-W3 by January 31.
$27,000 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.
$16.94 an hour. No local ordinance sets a higher rate. The tipped cash wage is $6.38.
April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- Connecticut Department of Revenue Services – IP 2026(1) Connecticut Circular CT Employer’s Tax Guide
- Connecticut Department of Revenue Services – IP 2026(7) Is My Connecticut Withholding Correct?
- Connecticut Department of Labor – Information on Unemployment Tax Rate for Calendar Year 2026
- Connecticut Department of Labor – What are the Tax Rates and Taxable Wage Base?
- Connecticut Department of Labor – Other Conditions of Liability
- Connecticut Department of Labor – What are the due dates of my quarterly tax returns?
- Connecticut Department of Labor – Unemployment Insurance (UI) Tax Division
- Connecticut Department of Labor – CTDOL Correspondence to Employers
- Connecticut Paid Leave Authority – Contributions
- Office of the Governor, State of Connecticut – Governor Lamont Announces Connecticut’s Minimum Wage Will Increase to $16.94 on January 1, 2026
- Connecticut Department of Labor, Wage and Workplace Standards Division – Tip Credit Statement Effective 01-01-2026
- U.S. Department of Labor, Wage and Hour Division – Minimum Wages for Tipped Employees
- U.S. Department of Labor, Wage and Hour Division – Overtime Pay: Salary Levels
- U.S. Department of Labor, Employment and Training Administration – FUTA Credit Reductions
Need help with Connecticut payroll compliance?
CrownGlobe runs payroll for U.S. businesses in every state, registration, withholding, filings, and year-end forms.
Running payroll in more than one state?
Connecticut alone means its own registration, its own deposit calendar and its own year-end reconciliation. Add a second state and the work compounds rather than doubles. CrownGlobe runs multistate payroll end to end: registration, deposits, quarterly returns and year-end.
Explore payroll processing services →Browse all state payroll guides →
Book a free consultation →