Key Takeaways
- Connecticut's top income tax rate is 6.99% (plus 6.35% on capital gains)
- CT DRS is especially aggressive with hedge fund and finance professionals
- 183-day rule applies—track your days carefully
- Many wealthy CT residents successfully relocate to Florida annually
Overview: Connecticut Tax Burden
Connecticut has a 6.99% top income tax rate, and the state is notorious for aggressive audits of departing wealthy residents, particularly those in finance and hedge funds.
$4,000 - $25,000+
Annual savings depending on income level
Connecticut Tax Rates
| Taxable Income | Tax Rate |
|---|---|
| $0 - $10,000 | 3% |
| $10,001 - $50,000 | 5% |
| $50,001 - $100,000 | 5.5% |
| $100,001 - $200,000 | 6% |
| $200,001 - $250,000 | 6.5% |
| $250,001 - $500,000 | 6.9% |
| Over $500,000 | 6.99% |
Connecticut's Audit Program
CT Department of Revenue Services (DRS) is known for:
- Aggressive pursuit of hedge fund managers who claim to relocate
- Detailed examination of "snowbird" claims
- Information sharing with NY (many CT residents work in NYC)
- Scrutiny of part-year returns from high earners
High-Profile Cases: Connecticut has pursued several high-profile cases against hedge fund managers. Proper documentation of your move is essential—thousands relocate successfully each year with proper planning.
Properly Exiting Connecticut
- Establish Florida domicile (address, Declaration, DL, voter registration)
- Sell or rent Connecticut property (rental to unrelated party)
- Relocate business operations if applicable
- Update all financial accounts to Florida
- File CT part-year return (CT-1040NR/PY) for move year
- Maintain detailed location documentation
Special Situations
NYC Commuters
Many CT residents commute to NYC. After establishing Florida residency, income for work physically performed in NY may still be NY-taxable, but CT cannot tax you.
Finance Professionals
Hedge fund managers and finance professionals face extra scrutiny. Document:
- Where trading decisions are made
- Location of your investment team
- Where client meetings occur
- Physical location of your office