Connecticut Payroll Tax Guide for Employers (2025)

Connecticut has several state payroll taxes that employers need to handle correctly. Unlike Massachusetts’s flat rate, Connecticut uses a progressive income tax — which makes withholding slightly more complex. Here’s what you need to know for 2025.

Connecticut State Income Tax Withholding

Connecticut has a progressive income tax with rates ranging from 2% to 6.99%. Unlike Massachusetts’s straightforward 5% flat rate, CT withholding depends on income level.

2025 CT Income Tax Rates:

Married/filing jointly brackets are roughly double.

For employer withholding purposes, use the Connecticut Employer’s Tax Guide (IP 2025(1)) tables published by the Connecticut Department of Revenue Services (DRS). Like the federal system, these annualize wages and apply the bracket rates.

Withholding Exemptions and the CT W-4

Connecticut uses Form CT-W4 (Employee’s Withholding Certificate). Employees choose:

• Filing status (Single, Married, Married, but withhold at higher single rate)
• Number of allowances — reduces withholding
• Additional withholding — optional dollar amount

Each allowance reduces annual taxable wages by $1,000, similar to Massachusetts.

New employees must complete a CT-W4. If they don’t, withhold at the highest rate (Withholding Code D).

Withholding Codes (CT-W4 Line C)

Connecticut uses letter codes instead of a simple count:

• A — Single, married filing separately, or married filing jointly with spouse NOT employed
• B — Married filing jointly, both employed
• C — Head of Household
• D — No exemptions (highest withholding rate — default if no CT-W4)

CT Paid Family & Medical Leave (CT PFML)

Connecticut launched its own PFML program in January 2022. It’s employee-funded through a payroll deduction.

2025 CT PFML:

• Employee contribution rate: 0.5% of gross wages
• Wage cap: Up to the Social Security wage base ($176,100 in 2025)
• Employer contribution: $0 (employers don’t contribute)
• Maximum employee deduction: $880.50/year (0.5% × $176,100)

Benefits available to employees:

• Up to 12 weeks of paid leave (plus 2 more for serious pregnancy complications)
• Wage replacement: 95% of wages up to 40× state minimum wage ($167.60/week threshold), then 60% of wages above that, up to a maximum benefit

Employer obligations:

1. Register with the Connecticut Paid Leave Authority (ct.gov/pfml)
2. Withhold 0.5% from employee wages each pay period
3. Remit contributions quarterly to the CT Paid Leave Authority
4. Post the CT PFML notice and provide written notice to employees

Key difference from MA PFML: Connecticut’s program is fully employee-funded (employers only pay if they’ve opted into the Shared Work program). Massachusetts employers with 25+ employees do have an employer contribution share.

Connecticut Unemployment Insurance (CT SUI)

Connecticut employers must contribute to the state unemployment insurance fund.

2025 CT SUI:

• Taxable wage base: $25,000 per employee per year
• New employer rate: 3.0% (non-construction); higher for construction
• Experience-rated range: 1.9% – 6.8%

Note: Connecticut’s SUI taxable wage base ($25,000) is significantly higher than Massachusetts ($15,000) or the federal FUTA base ($7,000). This means you’ll hit higher total SUI costs per employee in CT.

Annual cost example at 3.0% new employer rate: $25,000 × 3.0% = $750 per employee per year

CT SUI rates are experience-rated based on your unemployment claim history. Your rate notice arrives in December for the following year.

Filing and Payment

File Form UC-2 (Quarterly Wage and Tax Report) and pay quarterly:

• Q1 (Jan–Mar): due April 30
• Q2 (Apr–Jun): due July 31
• Q3 (Jul–Sep): due October 31
• Q4 (Oct–Dec): due January 31

Federal Payroll Taxes (Same as Massachusetts)

CT employers have the same federal obligations as all US employers:

FICA (Social Security + Medicare):

• Social Security: 6.2% employee + 6.2% employer on wages up to $176,100
• Medicare: 1.45% employee + 1.45% employer (no cap)
• Additional Medicare: 0.9% employee-only on wages over $200,000

FUTA:

• 6.0% on first $7,000 of wages
• Offset by CT SUI credit: effective FUTA rate is 0.6% for timely CT SUI filers

Registering as a Connecticut Employer

Before you can withhold and remit CT taxes, you need to register:

1. Connecticut Employer Registration — Register online at myconneCT (the CT DRS portal) for a withholding tax account
2. CT Unemployment Insurance — Register with the Connecticut Department of Labor (ReEmployCT system) for a SUI account
3. CT PFML Authority — Register at ctpaidleave.org for the paid leave program

Federal EIN required first — You’ll need your IRS EIN to complete all state registrations.

CT Withholding Filing Schedule

Most small CT employers file and pay quarterly. The DRS will notify you of your required frequency.

Annual Reconciliation

File Form CT-W3 (Annual Reconciliation of Withholding) by January 31, along with W-2 transmittal.

Key Differences: CT vs. MA Payroll

Minimum Wage and Overtime

Connecticut minimum wage (2025): $16.35/hr (higher than MA)

Overtime: Same federal FLSA rules apply — 1.5× for hours over 40/week. Connecticut follows FLSA for overtime exemptions.

Connecticut does have a separate state overtime law for domestic service workers — if you employ household workers, check the CT DOL guidance.

Common Connecticut Employer Mistakes

1. Using MA withholding tables for CT employees — Rates differ significantly. A $50,000 salary is taxed at 5% flat in MA, but at graduated rates in CT.

2. Forgetting CT PFML — Many small employers who registered for withholding and SUI forget the third registration (CT Paid Leave Authority).

3. Wrong SUI wage base — The $25,000 base is higher than federal; don’t stop contributing after $7,000 (FUTA base) or $15,000 (MA base).

4. Not registering in myconneCT before first payroll — You need a CT withholding account number before you can file.

5. Ignoring nexus — If you have MA employees who occasionally work in CT (or vice versa), you may have multi-state withholding obligations.

Multi-State Employers: MA + CT

If you employ workers in both Massachusetts and Connecticut:

• Employees who work entirely in one state are straightforward — just that state’s taxes
• Employees who work in both states require allocation and potentially split withholding
• Connecticut has a resident credit for taxes paid to other states, and vice versa
• Consult your payroll software or a CPA for multi-state situations

The OtterDesk payroll calculator currently covers Massachusetts withholding, FICA, and PFML. For Connecticut-specific calculations, use the CT DRS withholding tables in IP 2025(1) or a payroll service.