Connecticut tax return changes for 2026

• Filers with a qualifying child get an additional $250 on top of the regular Connecticut EITC.
• Withholding on lump-sum distributions from pensions and annuities is suspended from July 1, 2025 to December 31, 2026, unless the payee asks for it.
• The workforce housing credit is now 50% of qualifying cash contributions.
• Only cash gifts to youth organizations in Connecticut qualify for that credit.

DRS lists several new credits: a credit for licensed family child care homes and a 20% farm investment credit (both from January 1, 2026), a 25% credit for employer contributions to CHET accounts (from July 1, 2025), a UConn program credit, and a credit of 60% of the Connecticut tax from a successful convenience of the employer challenge.

The PE tax remains optional. It is elected on Form CT-1065/CT-1120SI and the election cannot be amended or revoked. The 2025 CT-PET instructions apply a 6.99% rate, and each member’s credit is 87.5% of their share of the tax. For calendar-year entities, estimated payments fall on April 15, June 15, September 15 and January 15.

A client who took a lump sum in late 2025 may have had nothing withheld for Connecticut. Ask about distributions before you prepare 2026 estimates. Connecticut sales tax guidance is at /us/sales-tax/connecticut.