Employers processing payroll in Connecticut start like payroll in most other states: by determining employee pay, hours worked, overtime, any withholding or deductions, payroll tax rates, and, ultimately, paying employees and delivering vendor payments. Employers should be aware of final pay and lawful deductions when payments are in dispute.
Knowing what the current federal laws and Connecticut labor laws, and legislation are regarding payroll is imperative right from the start.
Effective January 1st, 2026, Connecticut's minimum wage is $16.94 per hour.
Each year, gradual increases are calculated according to Federal Economic Indicators calculated by the U.S. Department of Labor (DOL).
Here is the schedule of previous Connecticut minimum wage changes based on the above state law:
In Connecticut, the minimum wage for minors (employees under the age of 18) is $14.40 (or 85% of the current minimum wage) for the first 90 days of employment.
Connecticut's Pay Equity Law requires that employers equally compensate employees of the opposite sex for comparable work, when the work is viewed as a composite of skill, effort, and responsibility, and is performed under similar working conditions.
If an employee can demonstrate that his or her employer discriminates on the basis of sex then such employer must demonstrate that such differential in pay is made pursuant to:
Employers in Connecticut must adhere to both Federal and state overtime regulations, defining how much overtime must be paid, and which employees are entitled to overtime pay.
Overtime exemptions or non-exempt status are set by an FLSA categorization for each employee. An employee's FLSA status will categorize the individual as "non-exempt" or "exempt" from overtime pay.
In order to be considered overtime exempt, an employee must pass a duties test, as well as a salary level test, which involves meeting a specific exempt salary threshold. Connecticut does not have its own threshold, so the federal threshold under the Fair Labor Standards Act (FLSA) applies.
Overtime pay is granted to non-exempt employees in Connecticut that have worked over 40 hours in a workweek. These non-exempt employees are entitled to overtime pay of 1.5 times their average hourly rate for every hour worked over 40 in a single week. Time worked does not include vacation, sick time, or holidays; thus, such days do not count when calculating overtime.
On the other hand, exempt employees are just that, exempt from overtime pay regardless of weekly hours worked.
Connecticut payment laws require employers to pay employees on a regularly scheduled pay frequency or payday, either weekly or every two weeks, which is also known as a bi-weekly pay period. If a regular payday falls on a non-workday, payment shall be made on the preceding workday.
Exceptions to these pay frequency requirements can include collective bargaining agreements, private and parochial schools, and state-aided institutions.
Under Connecticut Gen. Stat. Ann. § 31-71c, an employer must issue a final paycheck to a terminated employee no later than the following business day. However, an employee that quits his or her job is not entitled to a final paycheck until the next regularly scheduled pay date.
Final pay shall include all wages, not in dispute according to Sec. 31-71d. Payment of unused vacation at separation is guided by employer policy. Therefore, if the employer policy states that accrued unused vacation is forfeited at separation, it does not need to be paid. However, if the employer policy or bargaining agreement provides for the payment of accrued fringe benefits upon termination, then it must be included in final pay.
A Connecticut employer may not withhold or deduct wages from an employee’s paycheck, unless:
Under Connecticut Paid Leave, employers are required to deduct 0.5% from an employee’s paycheck each pay period. These deductions or contributions must be remitted to the CT Paid Leave Authority, where they are pooled into a trust from which benefit payments are made.
Contributions from employees may only total that of the federal Social Security contribution limit. For 2026, the limit is $184,500.
Payroll is a lengthy process, but understanding Connecticut and Federal law will help make processing payroll in Connecticut much easier. The alternative? Outsource payroll processing to an expert.
Connecticut employers are liable for Connecticut Unemployment Tax as well as for Federal Unemployment Tax under the Federal Unemployment Tax Act (FUTA).
Generally, the standard FUTA tax rate is 6.0% on the first $7,000 of wages subject to FUTA. Employers would receive a universal credit of 5.4% when filing their Form-940. This will result in a net FUTA tax rate of 0.6%.
Effective January 1st, 2026, the following Connecticut SUTA tax changes will take place:
The minimum and maximum contribution rates for 2026 will be 1.1% and 9.9%, respectively.
To minimize the short-term impact of the TWB increase, charged rates in the calendar year 2026 will be reduced by 1.125. As such, the state’s maximum charged rate for calendar year 2026 will be reduced to 8.9%.
Year |
Taxable on the First |
New Employer Rate |
Minimum Charged Rate |
Maximum Charged Rate |
| 2026 | $27,000 | 1.9% | 1.1% | 9.9% |
| 2025 | $26,100 | 2.2% | 1.1% | 8.9% |
| 2024 | $25,000 | 2.2% | 1.1% | 7.8% |
| 2023 | $15,000 | 2.8% | 1.1% | 6.6% |
| 2022 | $15,000 | 3.0% | 1.9% | 6.8% |
Only nine states don’t have income withholding tax - Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Income tax withholding is the money an employer withholds from each employee's wages to help pre-pay the state income tax of the employee.
Connecticut does have an income tax that varies based on seven different income brackets. The Connecticut income tax rates range from 2% to 6.99%. These rates have been in place since 2024.
Employees will submit a Form CT-W4 that will specify the applicable income tax rate based on the tax bracket and will provide the employer with the withholding amount needed.
NOTE: If an employee fails to submit a Form CT-W4, employers must then withhold a flat rate of 6.99% income tax.
An employer must withhold Connecticut tax if the employee is a resident of Connecticut and performing services in the state. Wages of a nonresident are subject to Connecticut income tax withholding if the wages are paid for services performed in Connecticut. The employer remits the withholding to the state and will issue the employee a W-2 statement indicating the amount of state income tax withheld for the employee.
Because Connecticut state businesses must be registered with the state to manage income withholding tax, employers should review the state’s business registration requirements. If the process seems like too much to handle alone, there are state tax registration services available.
Social Security tax is the tax levied on both employers and employees to fund the Social Security program. Social Security tax is collected in the form of a payroll tax mandated by the Federal Insurance Contributions Act (FICA) or a self-employment tax mandated by the Self-Employed Contributions Act (SECA).
Effective January 1, 2026, the maximum earnings subject to the Social Security payroll tax are $184,500.
The tax rate for Social Security, or OASDI tax rate, for wages paid in 2026 is set by statute at 6.2 percent for employees and employers, each. This is more commonly viewed as a combined rate of 12.4%. Self-employed individuals pay a tax rate of 12.4% for 2026.
For Medicare's Hospital Insurance (HI) program, the tax rates for 2026 are 1.45% for employees and employers, each, and 2.90% for self-employed persons.
The annual contribution limit for employees that participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan increased to $24,500 as of January 1st, 2026.
The limit on annual contributions to an IRA increased to $7,500 as of January 1st, 2026.
Employers should note that there are specific catch-up contribution limits for employees 50 or older. Taxpayers can also deduct contributions to a traditional IRA, Saver’s Credit, and SIMPLE retirement accounts if certain conditions are met.
Connecticut employers need to keep the following wage records on file, going back at least three years:
If your business operates in Connecticut, you may want to consider hiring a local Connecticut Payroll Company for help.
Start your search to get connected with a provider today, or contact us for help.