The Connecticut Department of Revenue Services released its 2021 Connecticut Circular CT Employer's Tax Guide containing the 2021 income tax withholding calculation rules and wage-bracket withholding tables. The 2021 withholding calculation rules and 2021 withholding tables are unchanged from 2020.

Employees with questions about whether they are having the proper amount of state income tax withheld for 2021 should refer to Publication 2021(7), Is My Connecticut Withholding Correct?

Supplemental withholding

Connecticut does not provide for a supplemental withholding rate.

Form CT-W4

The Department published the 2021 Form CT-W4, Employee's Withholding Certificate. Employees are required to submit Form CT-W4 to their employer upon starting new employment or within 10 days of a change in filing status or other change such as receipt of a bonus. The employer is required to withhold at the highest marginal rate of 6.99% with no withholding allowances for any employee who fails to submit Form CT-W4.

2020 Form W-2 filing reminders

Employers with 25 or more calendar-year 2020 Forms W-2 are required to electronically file Connecticut Form CT-W3, Connecticut Annual Reconciliation of Withholding, and the corresponding Forms W-2 by January 31, 2021 through the Department's new electronic myConnectCT system.

Employers unable to file electronically may file Form CT-8508, Request for Waiver from Filing Information Returns Electronically, and be granted a waiver from electronic reporting. Filers of 24 or fewer Forms W-2 may file paper Forms W-2 without requesting a waiver.

Payers filing 25 or more Forms 1099 must electronically file the 2020 Form CT-1096, Connecticut Annual Summary and Transmittal of Information Returns, and corresponding Forms 1099, by January 31, 2021.

The Department requires the filing of state copies of the following:

• Federal Form W-2G for winnings paid to a Connecticut resident even if Connecticut income tax was not withheld
• Federal Form 1099-MISC for:
• Payments made to a Connecticut resident even if Connecticut income tax was not withheld
• Payments made to a nonresident of Connecticut if the payments relate to services performed wholly or partly in Connecticut even if Connecticut income tax was not withheld
• Federal Form 1099NEC reporting nonemployee compensation for payments made to resident individuals or to nonresident individuals if the payments relate to services performed wholly or partly in Connecticut even if no Connecticut income tax was withheld
• Form 1099-R reporting distributions paid to Connecticut resident individuals, even if no Connecticut income tax was withheld; for all other recipients, only if Connecticut income tax was withheld
• Form 1099-K reporting payments to payees located in or with locations in Connecticut (though Form 1099-K is not due to the Department until 30 days after such forms are filed with the IRS)

For more information on Connecticut withholding tax, contact the Department at +1 860 297 5962 (toll free in Connecticut at +1 800 382 9463) or see the Department's website. Go here for current withholding publications and forms.

Ernst & Young LLP insights

For a full list of the 2021 state supplemental and highest income tax rates see EY Tax Alert 2021-0012.

For our state survey of state Form 1099-NEC filing requirements for 2021 see EY Tax Alert 2021-0023.

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