Estate Tax in Connecticut: What You Need to Know
Connecticut is one of the few states that imposes its own estate tax, with an exemption significantly lower than the federal threshold. If you are settling an estate or planning ahead, understanding both the state and federal rules is essential.
Connecticut Quick Facts
Yes
State Estate Tax
$13,610,000
State Exemption
No
Inheritance Tax
No
Community Property
Connecticut State Estate Tax
Connecticut imposes its own estate tax on estates exceeding the state exemption of $13,610,000. The tax rate is 12%, applied to the taxable portion of the estate. This is entirely separate from the federal estate tax.
The state exemption is significantly lower than the federal exemption of $13,990,000. This means an estate can owe Connecticut estate tax even if it owes nothing to the IRS.
Filing Requirements
The executor is responsible for filing the Connecticut estate tax return. If the estate also exceeds the federal threshold, both a state return and federal Form 706 must be filed. State estate taxes paid are deductible on the federal return, which can reduce the overall tax burden.
Federal Estate Tax for Connecticut Residents
Regardless of Connecticut's state-level rules, the federal estate tax applies to all U.S. residents. For 2025, the federal exemption is $13,990,000 per individual. Only the portion of the estate exceeding this threshold is taxed, at a top rate of 40%.
The gross estate includes everything the deceased owned at death: real estate, investments, bank accounts, business interests, life insurance proceeds (if the deceased owned the policy), retirement accounts, and personal property. Common deductions include the marital deduction (unlimited for assets passing to a U.S. citizen spouse), the charitable deduction, and debts and administration expenses.
Federal Estate Tax at a Glance
2026 Sunset Warning
The current high exemption was set by the Tax Cuts and Jobs Act of 2017. Unless Congress acts, the exemption is expected to drop to approximately $7 million (adjusted for inflation) after December 31, 2025. This would significantly increase the number of estates subject to federal tax. Connecticut residents with estates in the $7 million to $14 million range should consult an estate planning attorney.
Portability: Using Your Spouse's Unused Exemption
Portability allows a surviving spouse to claim the unused portion of the deceased spouse's federal estate tax exemption. This effectively doubles the exemption for married couples to $27,980,000.
To elect portability, the executor must file IRS Form 706 within 9 months of death (with a 6-month extension available), even if the estate owes no federal tax. Without filing, the unused exemption is permanently lost.
Important for Connecticut residents: Portability applies only to the federal exemption. Most states, including Connecticut, do not offer portability for the state estate tax exemption. The state exemption of the first spouse to die may be lost if not used.
Estate Tax vs. Inheritance Tax: What Is the Difference?
Estate Tax
- Paid by the estate before distribution
- Based on the total value of the estate
- The executor files and pays from estate assets
- Federal: $13,990,000 exemption
- State: 12 states + DC impose their own
Inheritance Tax
- Paid by the beneficiary who receives assets
- Rate depends on relationship to the deceased
- Each beneficiary files and pays individually
- No federal inheritance tax exists
- State: 6 states impose inheritance tax
Connecticut has an estate tax but no inheritance tax. The estate itself is responsible for paying the tax before assets are distributed to beneficiaries.
Reducing Your Estate Tax Liability
Whether you are concerned about state estate tax, federal estate tax, or simply want to transfer wealth efficiently, several proven strategies can reduce your taxable estate.
Annual Gifting
You can give up to $19,000 per recipient per year (2025) without using any of your lifetime exemption. Married couples can give $38,000 per recipient by splitting gifts. Over time, consistent annual gifting can significantly reduce the size of your estate.
Irrevocable Life Insurance Trust (ILIT)
Life insurance proceeds are included in your gross estate if you own the policy. By transferring the policy to an irrevocable life insurance trust, the proceeds are removed from your estate. The trust owns the policy, pays the premiums, and distributes proceeds to your beneficiaries outside of probate and estate tax.
Charitable Giving
Assets left to qualified charities are fully deductible from the gross estate. Options include direct bequests, charitable remainder trusts (which provide income to heirs first, then distribute to charity), and donor-advised funds. Charitable giving reduces both estate tax and income tax during your lifetime.
Trusts and Advanced Planning
Various trust structures can reduce estate tax liability: bypass trusts (credit shelter trusts), qualified personal residence trusts (QPRTs), grantor retained annuity trusts (GRATs), and spousal lifetime access trusts (SLATs). Each has specific rules and trade-offs. An estate planning attorney can determine which strategies are appropriate for your situation.
Education and Medical Payments
Payments made directly to educational institutions for tuition or to medical providers for healthcare expenses are exempt from gift tax entirely, with no dollar limit. These payments do not count against your annual exclusion or lifetime exemption. They must be paid directly to the institution, not to the individual.
When to Hire an Estate Tax Professional
Not every estate needs professional tax help, but certain situations strongly warrant it. Consider hiring an estate planning attorney or tax professional in Connecticut if:
- The estate is valued near or above the Connecticut exemption of $13,610,000 or the federal exemption of $13,990,000
- The deceased owned property in multiple states, especially states with their own estate tax
- The estate includes a business, partnership interests, or complex assets that require valuation
- The surviving spouse wants to elect portability of the unused federal exemption
- The deceased made significant lifetime gifts that need to be reconciled with the estate tax return
- You are planning ahead and want to minimize future estate tax for your heirs
For most estates well below the federal exemption and the state exemption, an experienced probate attorney can handle the necessary filings without specialized tax counsel. Larger or more complex estates benefit from a team that includes both a tax attorney and a CPA.
Frequently Asked Questions
Does Connecticut have an estate tax?
Yes. Connecticut imposes a state estate tax with an exemption of $13,610,000 and a top rate of 12%. This is in addition to the federal estate tax, which has a $13,990,000 exemption.
What is the estate tax exemption in Connecticut?
The Connecticut estate tax exemption is $13,610,000. Estates valued below this threshold owe no state estate tax. The federal exemption is $13,990,000, which is separate from the state exemption.
How do I file an estate tax return in Connecticut?
The executor must file a Connecticut estate tax return if the estate exceeds the state exemption. The filing deadline is typically 9 months after the date of death, matching the federal deadline. Extensions are usually available. You will also need to file federal Form 706 if the estate exceeds $13,990,000.
Can I reduce estate tax in Connecticut?
Yes. Common strategies include annual gifting (up to $19,000 per recipient tax-free), irrevocable life insurance trusts (ILITs), charitable giving, and spousal transfers. Working with an estate planning attorney in Connecticut is recommended for estates near or above the state exemption.
Is Connecticut estate tax separate from federal estate tax?
Yes. The Connecticut estate tax and the federal estate tax are completely separate. An estate can owe state tax even if it falls below the federal exemption. The Connecticut exemption ($13,610,000) is lower than the federal exemption ($13,990,000), so some estates owe state tax but no federal tax.
More Connecticut Guides
Important
This information is for general guidance only. It is not legal, financial, or tax advice. Laws vary by state and change regularly. Always verify current details with the relevant authority. This guide covers Connecticut. Other states may have different rules. Last reviewed: March 2026. If you spot an error, please contact us. See our editorial policy.
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