Opinion: Phasing Out Taxes On Social Security, Pension Payments

The following op-ed was written by state Sen. Will Haskell (D-26th), who represents Bethel, parts of New Canaan, Redding, Ridgefield, parts of Weston, parts of Westport, and Wilton:

There’s a question that keeps coming up as I work my way across the 26th district hosting a series
of Town Hall meetings. At nearly every stop, my constituents ask what we’re doing to make
Connecticut a more affordable place to live. I’ve talked about student loan relief, which will help
recent graduates stay in Connecticut. I’ve mentioned eliminating the business-entity tax, which
will lend a hand to entrepreneurs. But there’s another important reform that didn’t make the
headlines; we’re phasing out taxes on social security and pension payments.

Connecticut is one of just 13 states that taxes social security checks. If you’re like me and are
still a few years away from seeing your first social security payment, you’ve probably heard
about this from your parents or grandparents. I certainly have.

Well, starting this year, senior citizens and those near the age of retirement will see taxes on their
retirement income drop. It’s an impact that will have lasting benefits. To put it simply, by 2025,
pension and annuity income for individuals making less than $75,000 on their own, or $100,000
as a couple, will see a 100 percent tax exemption on that income. In just 2019, the partial
exemption of 14 percent will save $33 million statewide for filers on adjusted gross income and
an additional $24 million for Social Security filers. As the exemption amount escalates by 14
percent annually in coming years, that will result in significant reductions on state taxes for
households, putting money back in seniors’ pockets and giving them more financial flexibility
and security.

It goes without saying that senior citizens play a vital role in our community. Retirement allows
many seniors to become dedicated volunteers for local organizations. They’re taxpayers who
keep our state and local government running. As the AARP notes, citizens over the age of 50
make up 37 percent of the state’s population, yet their total economic contribution to the Gross
State Product is 47 percent and they support 49 percent of state and local taxes. It’s time we lend
a hand to these consumers who fuel our local economy and grandparents who teach the next
generation how to fish and ride a bike. Our tax structure should reflect the tremendous value of
those who live on fixed incomes.

As the cost of healthcare continues to rise, this is a small step we’ve taken to help those who
retire in Connecticut. By exempting these payments from the income tax, we’re putting money
back in the pockets of long-time residents. They worked to make this state what it is; the last
thing they should do is be taxed out of it.