Live in Connecticut, Work in New York: How Your Income Tax Actually Works

Many Connecticut residents work in New York and the tax rules for them are a common source of confusion. This guide explains the basics in plain English. It is general information; for your own return, use a tax professional who prepares both New York and Connecticut returns.

The short version

• New York taxes nonresidents on income earned from New York sources, including wages for work done in New York¹.
• New York City taxes its own residents. If you live in Connecticut, NYC’s resident income tax does not apply to you.
• Connecticut taxes its residents on all their income, wherever earned and gives a credit for income tax paid to another state on the same income².

Filing both returns

Each year you will file a New York nonresident return, reporting the share of your wages earned in New York and a Connecticut resident return. On the Connecticut return you claim the credit for income taxes paid to qualifying jurisdictions, which is calculated on a schedule in the Form CT-1040 instructions³. The credit is limited to the lower of the tax paid to New York on that income or the Connecticut tax on the same income.

Why your total may still go up or down

Because the credit is capped, you end up paying roughly the higher of the two states’ tax on your New York wages, plus Connecticut tax on your other income. Connecticut’s 2025 rates run from 2 percent to 6.99 percent⁴; compare with New York’s published rates for your income⁵. If you were paying NYC resident tax before, that tax goes away, which is often the largest change.

Hybrid and remote work: the convenience rule

New York’s “convenience of the employer” rule says that if you work for a New York employer and work from home for your own convenience, those home days count as New York workdays. Only days your employer requires you to work outside New York count as non-New York days. Connecticut’s Office of Legislative Research summarizes the rule, the court cases and Connecticut’s own reciprocal rule².

In practice, a hybrid worker who goes into Manhattan two days a week may still have most or all of their wages taxed by New York. Whether Connecticut’s credit fully offsets that depends on how the income is sourced under Connecticut law; this is exactly the kind of question to take to a professional.

A worked example of the method

We do not use a made-up salary here, because the result depends on your income, deductions and filing status. The method is:

1. Work out your New York-source wages (total wages times New York workdays divided by total workdays, applying the convenience rule).
2. Calculate New York nonresident tax on those wages.
3. Calculate Connecticut tax on all your income using the Connecticut schedule⁴.
4. Subtract the credit: the lower of the New York tax on that income and the Connecticut tax on the same income.

When the move saves money and when it does not

The move most clearly lowers income tax for people who were paying NYC resident tax. It saves less or nothing, for people who were already New York State residents outside the city. Property tax, which you did not pay directly as a renter, often outweighs any income tax change. Run the full picture before you assume a saving.

The NYC tax you leave behind

For many people moving from the five boroughs, the biggest income tax change is the end of New York City’s resident income tax. For single filers, the city’s rates run from 3.078 percent on the first $12,000 of taxable income to 3.876 percent on income above $50,000⁵.

At those rates, a single filer with $200,000 of New York taxable income pays roughly $7,600 a year in city tax. Moving to Connecticut ends that tax. Your New York State tax on New York wages continues and Connecticut taxes you as a resident with a credit, as described above.

Set that saving next to the property tax on a home. At Stamford’s 2025 median single-family price of $960,500⁶ the yearly property tax at the city’s FY2027 rate is about $16,345 to $16,903, depending on the tax district⁷. At Milford’s median of $539,000⁸ and 28.67 mills, about $10,817.

In other words, the city tax saving can cover part of a property tax bill, but rarely all of it. A buyer who was renting in Manhattan should expect total taxes to rise, even as income tax falls. The trade is usually space, schools or a yard, not a lower tax bill.

Keeping a workday log

Because New York taxes the share of your wages earned there, the number of days you work in New York matters. Keep a simple calendar of where you work each day: in the New York office, at home in Connecticut, traveling elsewhere for work, on vacation or on holidays.

Remember the convenience rule: if your employer is in New York and you work from home for your own convenience, New York may count those days as New York days². Days you travel for work to another state or days your employer requires you to work elsewhere, may count differently.

A log kept through the year is far easier than reconstructing your schedule at tax time. It is also your evidence if New York questions your allocation.

Withholding after the move

When you move, ask your employer’s payroll team to update your withholding. You will typically have New York nonresident tax withheld on New York wages and may need Connecticut withholding as well, depending on how the credit works for you.

If too little is withheld for Connecticut, you may owe a balance and possibly a penalty. If too much, you wait for a refund. A tax professional can help you set the right amounts after the first year, once you see how the two returns interact.

Bonuses and stock compensation

Bonuses, restricted stock and options earned while you lived or worked in New York can be taxable by New York even after you move. The share is usually based on where you worked during the period the compensation was earned.

If you move in the middle of a vesting period, the income may be split between your old and new status. This is one of the most common reasons to hire a professional in the first year.

Changing to a Connecticut job

If you take a job with a Connecticut employer and stop working in New York, New York generally no longer taxes your wages. You pay Connecticut tax only.

Some people make the move to Connecticut in two steps: first the home, then later a job closer to home. The working in Connecticut guide covers the major employers, and commuting within Connecticut covers the commute.

Choosing a town with taxes in mind

Because property tax varies so much by town, the town you choose matters more to your total tax than the income tax rules. Greenwich’s FY2027 rate of 10.125 mills is among the lowest in the state; West Hartford’s 46.77 is among the highest⁷.

For the commute and tax trade-offs in specific towns, see Greenwich, Stamford, Norwalk, Darien and Westport. Our Stamford vs Norwalk and Greenwich vs Darien comparisons put pairs of towns side by side.

The mill rate math guide, the cost of moving calculator and the costs and money hub help you put income tax, property tax and the car tax into one budget. When you are ready, get matched with a licensed Connecticut agent who works with New York commuters.

When two earners work in different places

Many households have one earner commuting to New York and another working in Connecticut or from home. Each person’s wages are sourced separately. The New York nonresident return reports only New York-source income, while the Connecticut resident return reports everything.

If you file jointly in both states, the forms combine your incomes in ways that can affect the rate applied to the New York wages. The result can surprise couples in their first year. This is a good reason to have the first year’s returns prepared by someone who files both states regularly.

Common mistakes in the first year

Forgetting the part-year returns. In the year you move, you will usually file part-year returns in both your old and new state, as well as the New York nonresident portion. Missing one can lead to notices later.

Assuming home days are Connecticut days. Under the convenience rule, they may not be². Check before you file.

Not updating withholding. If payroll still withholds as if you lived in New York City, you will overpay city tax until it is fixed. Update it the month you move.

Ignoring estimated payments. If you have income without withholding, such as investment income or freelance work, you may need to make Connecticut estimated payments.

Losing records. Keep your lease or closing statement, your driver’s licence change and your workday log together. They show when you moved and where you worked.

When to hire a CPA

Get help if you have stock compensation, bonuses earned over several years, a home office arrangement with your employer, income in more than two states or a mid-year move. Ask your employer’s payroll team to update your withholding for both states as soon as you move.

Estimated taxes if you are self-employed

If you are a freelancer or business owner who lives in Connecticut and works with New York clients, the sourcing rules can be different from wages. Income may be allocated based on where the work is performed or where the business is based.

Quarterly estimated payments to both states may be required. A CPA who files both states can set those up so you are not surprised at filing time. See working in Connecticut and Milford for a shoreline option with a shorter main-line ride than towns farther east.

Related reading

• Connecticut taxes for new residents
• Moving from NYC to Connecticut
• Connecticut vs Westchester for NYC commuters
• Commuting to NYC from Connecticut