Ben Fuchs: Hello and welcome back to How to Retire, the show where we take your retirement questions and turn them into real, actionable answers. I’m Ben Fuchs, coming to you from the Fuchs Financial Studio in Middletown, Connecticut. We often hear tax questions from clients, and one of the most common is: “Should I move to Florida?” When it comes to Connecticut taxes, there’s no one more qualified to explain the landscape than the person who oversees it. Mark Boughton is the Commissioner of the Connecticut Department of Revenue Services, appointed by Governor Ned Lamont. Before taking that role, he was the longest-serving mayor in Danbury’s history and spent decades serving the people of Connecticut. Commissioner Boughton, welcome to How to Retire. Mark Boughton: Thanks for having me. It’s great to be here, and this is a beautiful facility. Ben Fuchs: Thank you. Now, you were a Republican mayor who joined a Democratic governor’s administration. Does that make you the king of bipartisanship? Mark Boughton: I’ve always been a “fill the potholes and get the job done” kind of person. At the local level, and really at the state level, success isn’t about politics—it’s about solving problems. Governor Lamont and I were friends before I took this role. We had many conversations about whether I should join the administration, and eventually he convinced me. I think it’s a good message that Democrats and Republicans can work together for the benefit of the state. We certainly have debates and disagreements, but at the end of the day we’re focused on making Connecticut stronger. Ben Fuchs: Do you think having different perspectives actually improves decision-making? Mark Boughton: Absolutely. My role is often to be the person in the room asking, “Has anyone thought about this?” My job is to understand the numbers, how policy affects taxpayers, and how economic decisions impact people’s wallets. Having different viewpoints helps us arrive at better solutions. ________________________________________ Connecticut’s Retirement Tax Changes Ben Fuchs: As I understand it, Connecticut has made significant changes for retirees. If you’re single and have less than $75,000 of adjusted gross income, you generally won’t pay state taxes on Social Security, pension income, or IRA withdrawals. For married couples filing jointly, that threshold is $100,000. Is that correct? Mark Boughton: That’s correct. Ben Fuchs: So why are you giving singles a better deal than married couples? Mark Boughton: (Laughs.) We’re not trying to encourage divorce. Historically, Connecticut taxed retirement income. These changes represent a major shift and are designed to help retirees stay in Connecticut. It’s part of a broader effort to make the state more affordable. The governor often says, “We don’t want more taxes—we want more taxpayers.” We want to create an environment where businesses grow, people stay, and the economy expands. These retirement tax changes send a message that we want retirees to remain here with their families and enjoy everything Connecticut has to offer. Ben Fuchs: One argument I often make to clients is that they’ve spent decades building wealth so they can enjoy retirement. If their children and grandchildren live here, is saving a little money in taxes really worth moving away and missing those relationships? I’ve also seen many people move away and eventually come back. Mark Boughton: That happens quite often. One of the biggest mistakes people make is not planning early enough for retirement. When you’re in your twenties, retirement feels far away. I remember taking my first job as a teacher at 23 and not thinking about retirement at all. Then one day you wake up and realize retirement isn’t that far off. If someone had told me early on to save even a small amount consistently and increase it over time, the results would have been significant. That’s the power of compounding. Another concept people need to think about is the difference between lifespan and healthspan. It’s not just how long you’ll live—it’s how long you’ll be healthy enough to enjoy the life you’ve worked for. You may live into your 80s or 90s, but will you still be traveling, golfing, boating, and doing all the things you love? That’s why retirement planning is so important. You need resources available during those years when you’re healthy and active enough to truly enjoy them. Ben Fuchs: I couldn’t agree more. ________________________________________ Will Connecticut Expand These Tax Benefits? Ben Fuchs: Given these changes, are there plans to raise those income thresholds over time? Will the $75,000 and $100,000 limits increase with inflation? Mark Boughton: It’s an ongoing conversation. Taxes are only one part of affordability. Connecticut also has a relatively high cost of living. Energy costs, housing costs, and other expenses all affect retirees, especially those living on fixed incomes. We continue to evaluate where the right balance is. The state has been in a strong fiscal position and has produced significant surpluses. The question is whether that success is sustainable over the long term. If it is, we’ll continue discussing ways to reduce taxes and expand relief for retirees. We understand the challenges facing people on fixed incomes, and affordability remains a major focus. Ben Fuchs: Do you worry that these policies may encourage higher-income retirees to leave? Mark Boughton: People with substantial wealth can choose to live almost anywhere. But many choose Connecticut because their families, friends, and communities are here. We’ve seen that some retirees leave, but a meaningful percentage eventually return. They miss their families, their neighborhoods, and the sense of community they built over decades. Healthcare is another major factor. As people age, access to high-quality medical care becomes increasingly important. The Northeast offers some of the best healthcare systems in the world, and many retirees recognize the value of that. ________________________________________ Ben Fuchs: We’ve got much more to discuss, including additional tax changes and what they mean for retirees. Stay with us—we’ll be right back. Ben Fuchs: Welcome back to How to Retire. We’re talking with Connecticut Department of Revenue Services Commissioner Mark Boughton about Connecticut taxes and how retirees can navigate them wisely. We left off discussing people leaving Connecticut and the changes that have been made to encourage them to stay. Have those changes made a difference? Mark Boughton: I believe they have, but we have to be careful not to backslide. One advantage Connecticut has is that our top income tax rate is lower than New York’s. That difference matters to some people. We also remain competitive from a business perspective, with relatively favorable corporate tax rates. There are certainly people who choose to relocate, but taxes are rarely the number-one reason. When I ask people why they’re leaving, the most common answers are lifestyle and family. Some retirees dream about warmer weather and spending their days on the water. Others move because their children or grandchildren have relocated. Taxes are usually part of the conversation, but often not the primary driver. Ben Fuchs: And then they get to Florida in July and discover what 98 degrees with 98 percent humidity feels like. Mark Boughton: Exactly. Another factor is how mobile younger generations have become. Many people move to states like Texas, Florida, or South Carolina, and retirees often want to be closer to family. That’s a major reason people relocate. Taxes remain part of the equation, especially property taxes, which can be significantly lower in other states. ________________________________________ Understanding Connecticut Residency Rules Ben Fuchs: One thing we discussed off camera is that some people believe they’ve moved out of Connecticut when they haven’t actually changed their residency correctly. That’s become a real issue, hasn’t it? Mark Boughton: It’s a very significant issue. Many people believe that spending six months and one day outside Connecticut automatically makes them a resident of another state. That’s not how it works. Under Connecticut law, you must actually abandon Connecticut as your domicile. Ben Fuchs: What does that mean in practical terms? Mark Boughton: It means you have to demonstrate that your primary residence is no longer in Connecticut. That could involve selling your primary home, relocating your financial and personal affairs, registering to vote elsewhere, receiving mail at your new residence, and establishing meaningful ties to your new state. Simply buying a second home in Florida while maintaining your Connecticut residence doesn’t necessarily change your tax residency. You can own multiple homes, but if Connecticut remains your primary domicile, you’ll still be considered a Connecticut resident for tax purposes. Ben Fuchs: So it’s much more involved than many people realize. Mark Boughton: Absolutely. We examine a variety of factors when determining residency. The key question is whether you’ve genuinely abandoned Connecticut as your primary home. People should be very careful and seek professional guidance before making assumptions about residency status. Ben Fuchs: I remember hearing stories years ago about auditors looking at things like where people kept personal belongings to determine residency. Mark Boughton: There are many ways residency can be evaluated. The important point is that it’s based on the total picture, not a single factor. Ultimately, you need to be able to demonstrate that your primary life is centered somewhere other than Connecticut. Ben Fuchs: And if someone gets that wrong? Mark Boughton: Those cases can become very expensive. Many of the disputes that end up in court involve domicile questions. Taxpayers claim they’ve moved, and the state disagrees. Those cases often take years to resolve. My advice is simple: do it correctly the first time and avoid the legal battle altogether. Ben Fuchs: And talk with qualified professionals before making any decisions. Mark Boughton: Exactly. Financial advisors and attorneys can provide guidance. The Department of Revenue Services enforces the law, but we can’t provide individualized legal advice on how someone should structure their affairs. ________________________________________ Why Are Connecticut Property Taxes So High? Ben Fuchs: Let’s talk about property taxes because that’s another major factor for retirees. When I lived in Arizona, my property taxes were dramatically lower than what many Connecticut homeowners pay. Why is there such a difference? Mark Boughton: One of the biggest reasons is that Connecticut doesn’t have county government. In states like New York and Massachusetts, counties provide many services that Connecticut municipalities must provide on their own. That places a significant burden on cities and towns. Municipalities are responsible for schools, police departments, fire protection, emergency services, and many other essential functions. Those costs ultimately show up in property taxes. Ben Fuchs: So a lot of the issue comes down to how services are delivered. Mark Boughton: Exactly. One area where we could improve is regionalization. Connecticut has 169 municipalities, and many services are duplicated across those communities. For example, there are far more emergency dispatch centers than we probably need. Consolidating certain services could create efficiencies and reduce costs. The challenge is that Connecticut has a long tradition of local control, and people are understandably resistant to change. ________________________________________ The Burden on Retirees Ben Fuchs: I know retirees who are struggling with rising property taxes despite living on fixed incomes. One retired teacher I know earns around $22,000 a year and owns a longtime family home. Every year her property taxes rise, regardless of what’s happening in the economy. Eventually, that can force someone out of a home they’ve lived in for decades. Mark Boughton: That’s a real concern. Every two years we conduct a tax incidence study to examine how taxes affect Connecticut residents. The study shows that our income tax system is generally progressive—people who earn less pay less, and people who earn more pay more. Property taxes are different. Property taxes don’t adjust based on income. Whether your income is high or low, the tax bill is tied to the property itself. That’s one reason affordability is such an important discussion. Governor Lamont has expressed concern about this issue, and several studies are underway examining how services are funded and delivered throughout the state. ________________________________________ Looking for Long-Term Solutions Ben Fuchs: So the conversation isn’t just about raising or lowering taxes. It’s also about controlling costs. Mark Boughton: Exactly. Some of the solution involves finding efficiencies in government. Regionalizing services is one example. School districts are another area worth examining. As student populations decline in certain communities, we need to ask whether neighboring districts can share resources more effectively. The broader question is how we deliver services, how we fund them, and how we create a system that’s sustainable for the future. It won’t be perfect, but we can make meaningful improvements that help keep Connecticut affordable. Ben Fuchs: A friend of mine always says, “Progress, not perfection.” Mark Boughton: That’s exactly right. Just because something isn’t perfect doesn’t mean it shouldn’t be improved. ________________________________________ Ben Fuchs: When we come back, we’ll get practical. I’ll ask Commissioner Boughton for the three most important things every Connecticut retiree should know. Stay with us. Ben Fuchs: Welcome back to How to Retire. We’ve been talking with Connecticut Department of Revenue Services Commissioner Mark Boughton. Let’s get practical. If you could tell every Connecticut retiree—or future retiree—just three things they should know, what would they be? ________________________________________ 1. Start Saving Early Mark Boughton: The first thing I’d say is start saving as early as possible. I often think about what I’d tell my 25-year-old self. Whether it’s a 457 plan, a 401(k), a 403(b), a Roth IRA, or some combination of those, start putting money away now. You don’t want to depend entirely on Social Security for your retirement. We all hope Social Security will be there exactly as promised, but the best approach is to take control of your own future. If Social Security provides everything projected, that’s great. Think of it as a bonus. But build your own retirement savings so you’re not relying on anyone else. Most importantly, once you start saving, stay disciplined. Let compound growth work for you over time. Ben Fuchs: I couldn’t agree more. Regardless of the type of account, the key message is to start early and remain consistent. There’s nothing more powerful in retirement planning than time and compound interest. ________________________________________ 2. Work With a Financial Professional Mark Boughton: The second thing I’d recommend is meeting with a financial planner before retirement. It’s never too early, but by your 50s it’s especially important. Life happens. People get divorced. Health issues arise. Family responsibilities change. You want to understand how those events could affect your retirement plans. A good financial professional can help you evaluate your assets, identify risks, and determine whether you’re positioned to enjoy the lifestyle you’ve worked so hard to achieve. You only get one retirement. It’s worth taking the time to plan for it properly. Ben Fuchs: One of the things we see frequently is that people intend to work well into their late 60s or even their 70s, but health issues force them to retire earlier than expected. Part of our job is helping people prepare for that possibility so they can still maintain financial security if their plans change. ________________________________________ 3. Plan for Healthcare Costs Mark Boughton: The third thing I’d emphasize is healthcare. Healthcare becomes increasingly important as you age. If you’re 30 years old, it’s easy to think you’ll always be healthy. But life doesn’t always work that way. Many people encounter unexpected medical challenges in their 50s or 60s. You need to think about where you’ll receive care, whether quality healthcare is available, and how you’ll pay for it. Healthcare expenses can significantly affect retirement plans, especially for people who retire before Medicare eligibility begins at age 65. That’s another reason comprehensive planning is so important. Ben Fuchs: Healthcare is one of the largest retirement expenses people face, and many underestimate it. We spend a lot of time helping clients understand what those costs might look like and how they’ll fit into an overall retirement strategy. ________________________________________ The Importance of Planning for the Unexpected Mark Boughton: One thing people don’t always anticipate is becoming a caregiver. In my own life, I became the primary caregiver for my father after he developed dementia. That wasn’t something I had planned for. It required time, emotional energy, and financial resources. But that’s what families do. When your parents cared for you throughout your life, you want to be there for them when they need help. These are the kinds of life events that can have a major impact on retirement planning. ________________________________________ Estate Taxes in Connecticut Ben Fuchs: When I first entered this industry, estate taxes were a major concern for many Connecticut residents. There was a time when relatively modest estates could face significant taxation. That’s changed quite a bit, hasn’t it? Mark Boughton: It has. Today, Connecticut’s estate tax exemption is much closer to the federal level than it used to be. For most residents, estate taxes are no longer the concern they once were. We used to receive many complaints about estate tax issues. That’s far less common today. Ben Fuchs: And part of that effort was intended to reduce the incentive for retirees and higher-net-worth individuals to leave Connecticut? Mark Boughton: Absolutely. The goal is to make Connecticut a place where people want to stay, invest, and retire. ________________________________________ A Message From the Department of Revenue Services Ben Fuchs: Before we wrap up, is there anything else you’d like Connecticut residents to know? Mark Boughton: Yes. I want people to understand that the Department of Revenue Services is here to help. We’re not interested in playing “gotcha” with taxpayers. Our goal is to make sure people have the information they need and can meet their obligations successfully. If someone falls behind, we have payment plans and other options available. We want to help people get back into compliance. We’re also launching a new initiative called Pathways to Compliance, designed to help first-time offenders resolve issues by reducing penalties and creating manageable payment arrangements. The message is simple: if you have questions, reach out. Visit our website, review the resources available, and contact us if you need assistance. We’re here to help taxpayers understand the rules and stay on track. ________________________________________ Closing Remarks Ben Fuchs: Mark, thank you so much for joining us and sharing insights that most people wouldn’t otherwise have access to. Mark Boughton: My pleasure. Thanks for having me. Ben Fuchs: At Fuchs Financial, we look at the complete picture when building a retirement strategy—federal taxes, state taxes, healthcare costs, inflation, and everything else that affects your retirement income. Because the number on your statement isn’t what matters. What matters is the amount you actually get to keep and spend. If you’d like to understand what your retirement income could really look like, we’d be happy to help. Until next time, plan smart, retire happy.
