Connecticut Severance — 6.99% Top Rate, CT Paid Leave, 2026

Connecticut WARN: what applies#

Connecticut has no state-level mini-WARN notice statute. Federal WARN (29 U.S.C. §§ 2101–2109) is the operative regime — employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50+ affected at a single site of employment constituting at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Connecticut DOES have a distinctive plant-closing health-coverage continuation rule at Conn. Gen. Stat. § 31-51o, which requires employers undergoing certain plant closings or substantial relocations to continue group health insurance coverage for affected employees for a defined period — verify the current statutory text at the CGA before relying on the specific weeks of continuation, and read alongside federal COBRA, which separately provides 18 months of continuation for employees of any employer with 20+ workers.

How severance is taxed in Connecticut#

Connecticut income tax is graduated (seven 2026 brackets — 2.0% / 4.5% / 5.5% / 6.0% / 6.5% / 6.9% / 6.99%). The state does NOT publish a separate flat supplemental withholding rate. CT DRS IP 2026(1) Circular CT — the Connecticut Employer's Tax Guide effective January 1, 2026 — directs employers to use an aggregate method for supplemental compensation including severance: when supplemental wages are paid at the same time as regular wages, the employer adds them to the regular pay-period wages and withholds as if the total were a single payment; when supplemental wages are paid separately, the employer adds them to the last regular pay-period gross, recalculates total tax, subtracts the tax already withheld from regular wages, and withholds the difference from the supplemental check. For employees with no Form CT-W4 on file, IP 2026(1) requires withholding at a flat 6.99% (the top marginal rate). On top of CT state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA.

Calculate your situation#

Inputs default to Connecticut; adjust to your specifics.

FAQ#

Does Connecticut require severance pay?

No Connecticut statute generally requires private employers to pay severance. Connecticut has no state mini-WARN that would mandate pay-in-lieu of notice, and Connecticut has no Maine-style or New Jersey-style statutory severance mandate. The operative layoff-notice regime is federal WARN (29 U.S.C. §§ 2101–2109), which requires 60 days advance notice (or back pay for missed days) at employers of 100+ for covered mass layoffs and plant closings — but WARN mandates notice, not severance. Connecticut DOES have a distinctive plant-closing health-coverage continuation rule at Conn. Gen. Stat. § 31-51o, which requires employers undergoing certain plant closings or substantial relocations to continue group health insurance for affected employees for a defined statutory period. That is a continuation-of-coverage benefit, not a severance mandate. Severance itself is employer-discretionary in Connecticut unless your employment agreement, handbook, or collective bargaining agreement makes it mandatory.

How is severance taxed in Connecticut?

Connecticut DRS publishes IP 2026(1) — the Connecticut Employer's Tax Guide Circular CT (effective January 1, 2026) — and it does NOT establish a separate flat supplemental withholding rate for bonuses, commissions, or severance. Instead, IP 2026(1) directs employers to use an aggregate method: when severance is paid at the same time as regular wages, the employer combines them and withholds as if the total were a single payment for the regular payroll period; when severance is paid separately, the employer adds it to the last regular pay-period gross, computes tax on the combined amount, subtracts tax already withheld from regular wages, and withholds the difference from the severance check. For employees with no Form CT-W4 on file, IP 2026(1) requires withholding at a flat 6.99% (Connecticut's top marginal rate). Connecticut's 2026 brackets are 2.0% up to $10,000 single / $20,000 MFJ / $16,000 HoH; 4.5% to $50,000 / $100,000 / $80,000; 5.5% to $100,000 / $200,000 / $160,000; 6.0% to $200,000 / $400,000 / $320,000; 6.5% to $250,000 / $500,000 / $400,000; 6.9% to $500,000 / $1,000,000 / $800,000; and 6.99% above the top thresholds. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). State tax is reconciled on your Connecticut Form CT-1040.

Does Connecticut have a mini-WARN statute?

No. Unlike California (Cal-WARN), New York (NYS-WARN), New Jersey (Millville Dallas Airmotive), or Illinois (820 ILCS 65), Connecticut has no state-level mini-WARN that imposes employer notice obligations independent of federal WARN. The operative layoff-notice regime for Connecticut private employers is federal WARN (29 U.S.C. §§ 2101–2109): 60 days advance notice at employers with 100+ employees for mass layoffs affecting 50+ at a single site of employment that constitutes at least 33% of the active workforce (or 500+ regardless of percentage). Connecticut DOES have Conn. Gen. Stat. § 31-51o, which requires employers undergoing certain plant closings or substantial relocations to continue group health insurance coverage for affected employees for a defined period; that statute is a benefits-continuation rule, not a notice statute. Federal WARN penalties for non-compliance are back pay and benefits for each day notice was not given, up to 60 days, plus a $500/day civil penalty payable to the local government.

Does OWBPA apply in Connecticut?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Connecticut employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a "reduction in force" or "exit incentive program"), and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit. The Connecticut Fair Employment Practices Act (Conn. Gen. Stat. § 46a-58 et seq.) separately prohibits age discrimination by employers with 3 or more employees — a far lower threshold than the federal ADEA's 20-employee minimum, so smaller Connecticut employers are still covered by state law. A release of state-law age claims under § 46a-60 does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does. The safer practice is to insist on the OWBPA timeline regardless.

Can I collect Connecticut unemployment while receiving severance?

It depends on how the severance is structured. The Connecticut Department of Labor (CTDOL) generally treats severance based on the allocation method: severance paid as a lump sum that is NOT designated as wages for a specific notice period typically does not delay UI benefits — you can begin receiving the maximum weekly benefit amount immediately upon separation (subject to the standard one-week waiting period and other qualifying requirements). Severance designated as "wages in lieu of notice" or paid as salary continuation tied to a specific period is treated as wages and delays benefits dollar-for-dollar during that period. Vacation, sick, and holiday pay paid at separation may also delay UI under CTDOL rules. Practical takeaways: (a) file your CT UI claim with CTDOL on or shortly after your last day worked to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply at filectui.com and on weekly certifications — failure to report severance is fraud; (c) confirm the current CTDOL maximum weekly benefit amount and any dependent allowance at portal.ct.gov/dol before relying on net-of-benefits figures.

Are non-competes enforceable in Connecticut after a layoff?

Often yes if reasonable — Connecticut non-compete law is primarily common-law and built on a five-factor reasonableness test laid out by the Connecticut Supreme Court in Robert S. Weiss & Associates v. Wiederlight, 208 Conn. 525 (1988). The factors are (1) the length of time of the restriction, (2) the geographic area covered, (3) the fairness of the protection accorded to the employer, (4) the extent of the restraint on the employee's ability to pursue an occupation, and (5) the extent of interference with the public's interests. Connecticut also has sector-specific statutory limits: Conn. Gen. Stat. § 20-14p restricts physician non-competes to 1 year and 15 miles; § 20-12e similarly restricts advanced-practice-registered-nurse (APRN) non-competes; and Conn. Gen. Stat. §§ 31-50a and 31-50b further restrict security-guard and broadcast-employee non-competes. Connecticut courts have judicial-modification authority to narrow overbroad covenants under Wiederlight. The post-employment context generally weighs in favor of the employee — courts are more skeptical of enforcement against an involuntarily separated employee than against one who quit to compete. Practical takeaway: in Connecticut, the "non-compete release" clause in your severance offer can have real value, and a covenant that is reasonable in time, geography, and scope can be enforced; ask your employer to either remove the covenant or narrow duration/geography/restricted activities in exchange for signing the release. Have an attorney review before signing.

How does CT Paid Leave interact with my severance?

Connecticut Paid Leave (administered by the CT Paid Leave Authority under Public Act 19-25, codified at Conn. Gen. Stat. §§ 31-49e to 31-49t) is funded by a 0.5% employee payroll contribution capped at the Social Security wage base, and provides up to 12 weeks of partial wage replacement in a 12-month period for qualifying family- and medical-leave events (with additional leave available for incapacity related to pregnancy). The 0.5% employee contribution applies to wages paid during active employment — it does NOT apply to severance paid AFTER the employee's last day of work. CT Paid Leave benefits are also independent of severance: if you experience a qualifying CT Paid Leave event (e.g., your own serious health condition, baby bonding, caring for a family member) during a salary-continuation severance period, you can generally apply for CT Paid Leave benefits without forfeiting severance, though CTPL benefits and any continuing wages may be coordinated. Confirm the live CTPL benefit amount (a percentage of the average weekly wage, capped at 60 times the Connecticut minimum wage) at ctpaidleave.org before relying on specific dollar figures.