Connecticut Veteran Benefits 2025: Property Tax, Income Tax & Financial Guide

Connecticut made a major shift in 2021, becoming one of the most tax-friendly states for military retirees by fully exempting military retirement pay from state income tax. Combined with new property tax exemptions for disabled veterans, Connecticut now offers substantial financial benefits—but the state's high cost of living remains a critical factor.

Here's what you need to know about Connecticut's veteran tax benefits, including the full military retirement exemption, expanded property tax breaks for disabled veterans, and how these benefits stack up against the state's notoriously high property taxes and cost of living.

Bottom Line Up Front

Here's what Connecticut offers veterans in 2025:

Military retirement pay: 100% exempt from state income tax (since 2021)
Property tax exemption: NEW full exemption for 100% P&T disabled veterans (2024+)
Property tax exemption (traditional): $10,500-$76,500+ depending on town's revaluation factor
VA disability pay: Completely tax-free (federal and state)
State income tax rate: 3% to 6.99% on other income
Cost of living: 21.6% higher than national average (8th most expensive state)

Potential annual savings for a 100% disabled veteran: $3,000-$12,000+ depending on property value, location, and retirement income.

Reality check: Connecticut's veteran benefits are excellent, but property taxes remain among the nation's highest (3rd nationally). Even with full exemptions, the overall cost of living is steep.

Income Tax Treatment for Veterans

Military Retirement Pay - 100% Exempt

Since 2021, Connecticut has fully exempted military retirement pay from state income tax—a dramatic improvement from the previous partial exemption.

What's exempt for 2025:

100% of military retirement pay excluded from Connecticut income tax
No income limits or caps
No age restrictions
Applies to all military branches

How it works:

Military retirement under $30,000/year? All exempt, zero state tax
Retire with $50,000/year? All exempt, zero state tax
Retire with $80,000/year? All exempt, zero state tax

The math: At Connecticut's progressive tax rates (3-6.99%), exempting all military retirement saves approximately $1,500-$5,600 per year depending on your retirement income.

Why This Matters

Connecticut joins the majority of states offering full military retirement exemptions. This places Connecticut in a competitive position compared to expensive neighboring states like New York, which taxes military retirement.

Before 2021, Connecticut only partially exempted military retirement pay. The shift to 100% exemption represents approximately $100 million in annual tax relief for Connecticut's 135,000+ veterans.

VA Disability Compensation - Tax-Free

All VA disability compensation remains exempt from federal and state taxation. Whether you receive $171/month for a 10% rating or $3,946/month for 100% with dependents (2025 rates), you won't pay taxes on it.

Important: VA disability compensation doesn't count toward adjusted gross income for any Connecticut tax calculations.

Survivor Benefit Program (SBP)

SBP payments received by surviving spouses are fully exempt from Connecticut state income tax, mirroring the treatment of military retirement pay.

State Tax Rates (For Other Income)

Connecticut operates on a graduated income tax system:

Tax Year 2025 rates:

3% on taxable income up to $10,000 (single) or $20,000 (married filing jointly)
5% on income between $10,000-$50,000 (single) or $20,000-$100,000 (married)
5.5% on income between $50,000-$100,000 (single) or $100,000-$200,000 (married)
6% on income between $100,000-$200,000 (single) or $200,000-$400,000 (married)
6.5% on income between $200,000-$250,000 (single) or $400,000-$500,000 (married)
6.9% on income between $250,000-$500,000 (single) or $500,000-$1,000,000 (married)
6.99% on income over $500,000 (single) or $1,000,000 (married)

Most military retirees fall into the 3-5.5% brackets for non-military income.

Comparison to Neighboring States

State	Military Retirement	Top Income Tax Rate	Property Tax Ranking
Connecticut	100% exempt	6.99%	3rd highest nationally
New York	Partial exemption	10.9%	7th highest
Massachusetts	100% exempt	5% flat	12th highest
Rhode Island	$15K-$20K exempt	5.99%	8th highest
New Jersey	Partial exemption	10.75%	Highest nationally

Connecticut's full military retirement exemption makes it more competitive than New York and New Jersey, but property taxes remain a challenge.

Property Tax Exemptions for Veterans

Connecticut made major changes to veteran property tax exemptions in 2024. Now there are two separate programs.

NEW: Full Property Tax Exemption for 100% P&T Veterans (2024)

This is the big one: Starting with assessment years beginning October 1, 2024 or later, veterans with 100% Permanent and Total (P&T) disability ratings receive a full property tax exemption on their primary dwelling.

Eligibility:

100% Permanent and Total (P&T) VA disability rating
Must be your primary residence
No income restrictions

What this means: If you own a home valued at $400,000 in Hartford (mill rate 68.95), your annual property tax bill would normally be $19,305. With this exemption: $0.

This is transformative for 100% disabled veterans in Connecticut, where property taxes are the 3rd highest in the nation.

Traditional Veteran Property Tax Exemption

For veterans with disability ratings below 100% P&T (or those who prefer this option), Connecticut still offers the traditional exemption.

2025 exemption amounts:

$10,500 base exemption (income under $18,000 single / $21,000 married)
$5,250 base exemption (income above those thresholds)
Multiplied by town's revaluation increase factor

Critical detail: Each town has a "revaluation increase factor" that multiplies these base amounts. A town with a factor of 3.0 would provide:

$31,500 exemption (low income)
$15,750 exemption (higher income)

A town with a factor of 7.0 would provide:

$76,500 exemption (low income)
$37,625 exemption (higher income)

You must check with your local assessor to determine your town's specific increase factor.

How Property Tax Works in Connecticut

Connecticut has the 3rd highest property taxes in the nation, behind only New Jersey and Illinois.

Key features:

Assessment rate: Generally 70% of market value
Mill rate: Varies dramatically by town (10.85 to 68.95)
Effective rates: 1.5% to 2.5% of home value annually

Hartford has the highest mill rate at 68.95, while wealthy Greenwich has 12.041.

Real-World Examples

Hartford (mill rate 68.95, highest in state)

Home value: $270,000
Assessment (70%): $189,000
100% P&T exemption: $0 tax
Without exemption: $13,028/year
Annual savings: $13,028

Stamford (mill rate ~20.0, affluent town)

Home value: $615,000
Assessment (70%): $430,500
100% P&T exemption: $0 tax
Without exemption: $8,610/year
Annual savings: $8,610

New Haven (mill rate ~40.0)

Home value: $300,000
Assessment (70%): $210,000
100% P&T exemption: $0 tax
Without exemption: $8,400/year
Annual savings: $8,400

Norwich (mill rate ~27.0, near submarine base)

Home value: $250,000
Assessment (70%): $175,000
100% P&T exemption: $0 tax
Without exemption: $4,725/year
Annual savings: $4,725

Income Limits for Traditional Exemption

For the traditional exemption program (not the new 100% P&T full exemption):

Enhanced exemption ($10,500 base):

Single: Income under $18,000
Married: Income under $21,000

Reduced exemption ($5,250 base):

Single: Income over $18,000
Married: Income over $21,000

Income includes:

Military retirement pay (before exemptions)
VA disability compensation
Social Security benefits
Wages from employment
Investment income
All other income sources

Eligibility Requirements

For 100% P&T full exemption:

100% Permanent and Total disability rating from VA
Property is your primary residence

For traditional exemption:

Honorably discharged veteran
90+ days active duty during wartime OR any service-connected disability
Connecticut resident
Own property in Connecticut

Vehicle Registration Benefits

Connecticut does not offer vehicle registration fee exemptions for disabled veterans.

Disabled Veteran license plates:

Available to veterans with service-connected disabilities
Annual registration: Standard fees apply ($120-$200+ depending on vehicle)
Purple Heart plates available
Congressional Medal of Honor recipients: Free registration

The reality: Unlike many states, Connecticut doesn't provide registration fee exemptions for disabled veterans. This is one area where the state lags behind.

Financial Impact Analysis

Let's calculate the 20-year financial impact for a 100% P&T disabled veteran in Connecticut.

Scenario: E-7 Retiree, 20 Years Service, 100% P&T Disabled

Annual income:

Military retirement: $45,000
VA disability: $47,300 (100% with dependents)
Total: $92,300

Home: $350,000 (median for many CT towns)

Connecticut Savings Over 20 Years

Benefit	Annual Savings	20-Year Total
Property tax exemption (100% P&T)	$8,575	$171,500
Military retirement tax exemption	$2,250	$45,000
TOTAL	$10,825	$216,500

Note: This assumes:

2.45% effective property tax rate (Connecticut average)
5% state income tax bracket
No increase in exemption amounts over time (conservative estimate)
Home value remains constant

The Cost of Living Reality Check

While $216,500 in savings over 20 years is substantial, let's compare Connecticut to a veteran-friendly, lower-cost state.

Same scenario in Alabama (no state income tax on military retirement, lower property taxes, 84% lower cost of living):

Home price: $200,000 (vs. $350,000)
Property tax: ~$2,400/year (higher rate but lower value, with exemption)
Income tax on military retirement: $0
Overall cost of living: 16% below national average (vs. CT's 21.6% above)

The bottom line: Even with excellent veteran benefits, Connecticut's high cost of living means you'll likely spend significantly more over 20 years compared to lower-cost states. Housing alone costs 44.7% more than the national average.

However: Connecticut offers advantages that matter to many veterans:

Excellent VA healthcare (West Haven VAMC is highly rated)
Small state (nowhere is far from VA facilities)
Strong submarine veteran community (Groton/New London)
Major defense contractor employment (Electric Boat, Pratt & Whitney, Sikorsky)
Top-tier universities

How to Claim Your Benefits

Step 1: Military Retirement Tax Exemption

Timeline: Claim when filing 2025 taxes (in early 2026)

How to claim:

File Connecticut Form CT-1040 (resident income tax return)
Report military retirement on Line 5
Claim full subtraction on Schedule 1, Line 41
Attach Form 1099-R showing military retirement distributions

Documents needed:

1099-R showing military retirement distributions
DD-214 or equivalent military discharge papers

Where to get help: Connecticut Department of Revenue Services (DRS) at 1-800-382-9463

Step 2: Property Tax Exemption (100% P&T Full Exemption)

Timeline: Apply as soon as you receive 100% P&T rating

Required documents:

VA rating decision letter showing 100% Permanent & Total
DD-214 (Certificate of Release or Discharge from Active Duty)
Connecticut driver's license or ID
Property deed or mortgage statement
Completed application form (varies by town)

Where to apply: Your town's assessor's office

Major town assessor offices:

Hartford: (860) 757-9620 | hartford.gov/assessor
New Haven: (203) 946-8240 | newhavenct.gov/assessor
Stamford: (203) 977-4035 | stamfordct.gov/assessor
Bridgeport: (203) 576-7281 | bridgeportct.gov/assessor
Waterbury: (203) 574-6825 | waterburyct.gov
Norwalk: (203) 854-7731 | norwalkct.org/assessor
Greenwich: (203) 622-7876 | greenwichct.gov/assessor

Processing time: 30-90 days, depending on town

Deadline: File by October 1 to receive exemption for current tax year. If filed after October 1, exemption begins the following year.

Step 3: Contact Connecticut DVA for Assistance

Connecticut Department of Veterans Affairs

Main Office: 287 West Street, Rocky Hill, CT 06067
Phone: (860) 616-3600
Veterans Info Line: 1-866-928-8387
Email: oaa.dva@ct.gov
Website: portal.ct.gov/dva

Five district offices across the state provide in-person help with benefit applications:

1st District (Rocky Hill): (860) 616-2336
2nd District (Norwich): (860) 887-9162
3rd District (Milford): (203) 874-6711
4th District (Fairfield): (203) 418-2005
5th District (Waterbury): (203) 805-6340

Frequently Asked Questions

Is the 100% P&T property tax exemption available retroactively?

No. The exemption applies starting with assessment years beginning on or after October 1, 2024. You cannot receive retroactive benefits for prior years.

Do I need to reapply for the property tax exemption every year?

100% P&T full exemption: Generally no, but towns may require periodic verification of P&T status.

Traditional exemption: Requirements vary by town. Many require annual income verification if claiming the low-income enhanced amount.

What if I'm rated 90% or lower?

You qualify for the traditional property tax exemption (with amounts based on your town's revaluation factor), but not the new 100% P&T full exemption. The full exemption specifically requires Permanent and Total status.

Can I get the property tax exemption on a second home or rental property?

No. The exemption applies only to your principal place of residence.

What counts as "100% Permanent and Total" for the full exemption?

Your VA rating decision letter must specifically state "Permanent and Total." A 100% schedular rating alone doesn't automatically qualify unless it's designated P&T. TDIU (Total Disability based on Individual Unemployability) may qualify—check with your town assessor.

What if my county denies my exemption application?

You have the right to appeal:

Request a written explanation from your town assessor
Contact Connecticut DVA for assistance: (860) 616-3600
File an appeal with your town's board of assessment appeals
Contact your district Connecticut DVA office for advocacy support

Can I use both the military retirement exemption and the property tax exemption?

Yes! These are separate benefits. If you're retired military AND 100% P&T disabled, you benefit from both.

Will these benefits affect my federal taxes?

No. State tax benefits don't impact your federal tax liability. VA disability compensation and the tax treatment of military retirement remain unchanged federally.

Does Connecticut tax my TSP or 401(k) withdrawals?

Yes, fully, at the normal income tax rates (3-6.99%). Connecticut doesn't offer special treatment for retirement account withdrawals like some states do.

I'm stationed at the submarine base in Groton but claim residency in another state. Can I get these benefits?

No. These are Connecticut resident benefits only. Many active-duty service members maintain legal residency in their home states to avoid Connecticut's income tax, but this means you won't qualify for Connecticut veteran benefits.

What if I move to Connecticut after retiring from the military?

You can claim the military retirement exemption starting with your first full year as a Connecticut resident. The property tax exemption becomes available once you establish residency, own property, and meet eligibility requirements.

Does Connecticut tax Social Security benefits?

For most military retirees, Social Security is exempt. Connecticut exempts Social Security for:

Single filers with AGI under $75,000
Married filing jointly with AGI under $100,000

If your income exceeds these thresholds, 25% of Social Security becomes taxable.

Cost of Living Considerations

Before moving to Connecticut for veteran benefits, understand the cost reality.

Housing Costs (Median Home Prices, 2025)

Hartford: $270,000
New Haven: $249,000-$350,000
Stamford: $614,300-$725,000
Bridgeport metro: Monthly payment ~$4,500
Norwich/Groton area: $250,000-$300,000
Waterbury: $220,000
State median: $415,300

Overall Cost of Living

Connecticut's cost of living is 21.6% higher than the national average (8th most expensive state):

Housing: 44.7% above national average
Utilities: 28% above national average
Groceries: 14.2% above national average
Transportation: 11.8% above national average
Healthcare: 7% above national average

Property Tax Burden

Connecticut has the 3rd highest property taxes in America:

Average effective rate: 1.5-2.5% of home value
Mill rates range: 10.85 (Washington) to 68.95 (Hartford)
Regional variation: Greater Bridgeport Planning Region averages $8,550/year; Northeastern Connecticut averages $4,340/year

Tax Burden Beyond Income Tax

Sales tax: 6.35% state rate
Gas tax: $0.25 per gallon
Vehicle registration: $120-$200+ annually based on value (no veteran exemption)

Where Connecticut Veteran Benefits Make the Most Sense

You might benefit from Connecticut if:

You work at Electric Boat, Pratt & Whitney, or Sikorsky (high salaries offset costs)
You're 100% P&T disabled (full property tax exemption is transformative)
You value proximity to submarine community (Groton/New London)
You need excellent VA healthcare (West Haven VAMC is highly rated)
You have strong family ties in Connecticut
You value small-state convenience (nowhere is far from anything)

You might be better off elsewhere if:

Maximizing retirement income on a fixed budget is your priority
You're rated less than 100% disabled (benefits are less impactful)
You prefer warm weather and lower taxes (Southeast states)
You want lower housing costs
You want to maximize savings over 20-30 years

Key Takeaways

Connecticut fully exempts military retirement - 100% exemption saves $1,500-$5,600 annually depending on retirement income
100% P&T full property tax exemption is game-changing - Save $5,000-$13,000+ annually in a state with the nation's 3rd highest property taxes
Connecticut remains expensive - Even with veteran benefits, expect to pay 21.6% more than national average for cost of living
Small state advantage - Nowhere in Connecticut is far from VA facilities, making healthcare access excellent
Strong submarine community - Groton/New London area offers unique veteran culture and Electric Boat employment
Benefits are progressive - Lower disability ratings receive traditional exemptions; 100% P&T veterans get full exemptions
Apply immediately - Don't leave money on the table. If you qualify for the 100% P&T exemption, file with your town assessor as soon as you get your rating

Resources

Connecticut Department of Veterans Affairs: (860) 616-3600 | portal.ct.gov/dva
Connecticut DRS (taxes): 1-800-382-9463 | portal.ct.gov/DRS
Property Tax Exemption Info: Contact your town assessor's office
Veterans Info Line: 1-866-928-8387
Find Your Town Assessor: Search "[your town] CT assessor" online

Information current as of January 2025. Tax laws and benefit amounts change. Verify specific details with your town assessor and the Connecticut Department of Revenue Services before making financial decisions.