What payroll deductions are employers required to withhold?

Connecticut Payroll Tax Deductions Employers Must Withhold

In Connecticut, employers have specific payroll tax withholding obligations to ensure compliance with state and federal requirements. Understanding these deductions is essential for accurate payroll processing and reporting.

Mandatory Payroll Deductions

• Federal Income Tax Withholding: Employers must withhold federal income tax based on employee Form W-4 information and IRS tax tables.
• Social Security and Medicare Taxes (FICA): Employers are required to withhold Social Security tax at 6.2% and Medicare tax at 1.45% from employee wages.
• Connecticut State Income Tax: Connecticut requires withholding of state income tax. Employers calculate this based on employee Form CT-W4 and state withholding tables.
• State Unemployment Insurance (SUI): While employers pay SUI tax, there is no employee withholding for SUI in Connecticut.
• Federal Unemployment Tax (FUTA): This is an employer-only tax; no withholding from employees.
• Other Deductions: Employers may withhold additional amounts as authorized by the employee, such as for retirement plans, health insurance premiums, or wage garnishments.

Operational Considerations

• Recordkeeping: Maintain accurate records of all payroll deductions for compliance and audit purposes.
• Reporting: File required payroll tax reports with the Connecticut Department of Revenue Services (DRS) and the IRS on time.
• Payroll System Automation: Use payroll software configured for Connecticut tax rates and withholding tables to reduce errors.
• Employee Classification: Properly classify workers as employees or independent contractors to ensure correct tax withholding.
• Compliance Updates: As of 2026, regularly check for updates to Connecticut tax withholding rates and rules.