Connecticut Estate Tax 2026: The $15M Exemption, the Gift Tax, and Two Things CT Does Differently

How Connecticut's estate tax changed — and where it stands now

Connecticut used to be one of the most aggressive estate tax states in the country. As recently as 2016, Connecticut taxed estates above $2,000,000 per person — catching professional couples with modest retirement savings, a suburban home, and life insurance. The state gradually raised its exemption each year, mirroring the rising federal exemption:

The 2023 change was significant: Connecticut law was amended to peg the Connecticut exemption to the federal basic exclusion amount each year going forward. When OBBBA permanently raised the federal exemption to $15M effective January 1, 2026, Connecticut's exemption rose to $15M in lockstep. The two exemptions now move together.

For families whose estates were caught in the CT-only gap during 2016–2022 (when CT had a $2M–$7M exemption while federal had $5M–$12M), the increase represents a complete reprieve. A Greenwich couple with a $10M estate who owed roughly $1.1M in Connecticut estate tax in 2020 owes $0 in 2026 — assuming their estate has not grown beyond $15M.

Who still faces Connecticut estate tax in 2026

With both CT and federal exemptions at $15M per person, Connecticut estate tax in 2026 is primarily a concern for:

• Estates above $15M per person. These owe 12% on the excess to Connecticut, plus up to 40% federal on the same excess above $15M. The combined marginal rate is significant for very large estates.
• Married couples with combined estates above $30M (without credit shelter trust planning). Because Connecticut offers no portability, a surviving spouse who inherits the full estate at first death may later face only one $15M CT exemption against a combined $30M+ estate — a potentially large state estate tax that could have been avoided with a credit shelter trust at first death.
• Connecticut residents with estates approaching $15M who make large taxable lifetime gifts. The CT gift tax means gifts above the annual exclusion reduce the CT exemption available at death — unlike in most states, where lifetime giving above federal limits has no additional state tax consequence.
• Non-residents who own Connecticut-situs real estate. Connecticut imposes estate tax on Connecticut-situs real property of non-residents, prorated based on the ratio of Connecticut property to total gross estate. A New York resident who owns a Litchfield County vacation property or Greenwich commercial real estate may have Connecticut estate tax obligations at death.

The Connecticut gift tax — the only one in the country

Connecticut stands alone among the 50 states in levying a state gift tax. Every other state that imposes an estate tax imposes it only at death — lifetime gifts above the federal annual exclusion reduce the federal estate (through the unified credit) but trigger no additional state tax. In Connecticut, those same gifts reduce the Connecticut estate exemption and, once lifetime taxable gifts exceed $15M, trigger Connecticut gift tax at 12%.

The 6-month filing deadline — shorter than most states

Connecticut's estate tax return is due 6 months from the date of death.³ Most states with estate taxes allow 9 months (matching the federal Form 706 deadline). Connecticut's 6-month window is tighter, and it applies to both taxable and non-taxable estates.

What assets are included in the Connecticut gross estate

Connecticut is a common-law state — only half the step-up basis

Connecticut is not a community property state. For married couples with jointly-owned assets, this has a meaningful impact on heirs compared to residents of Washington, California, Nevada, and other community property states.

In community property states, both halves of community property receive a step-up in basis at the first spouse's death under IRC §1014(b)(6). In Connecticut (a common-law state), only the decedent's half steps up to date-of-death fair market value. The surviving spouse's existing 50% retains its original cost basis.

Married couples: no portability and what to do instead

The federal estate tax allows the surviving spouse to carry forward the deceased spouse's unused exemption — the "DSUE" election, filed via IRS Form 706 within 9 months of death (plus extensions). Under OBBBA, a married couple has a combined federal exemption of $30M with portability.

Connecticut does not recognize portability.² Each Connecticut estate receives one $15M exemption. At the $15M level, this is primarily a concern for married couples with combined estates above $30M — a much higher bar than the no-portability problem in states like Massachusetts ($2M exemption), Oregon ($1M), or Illinois ($4M). Still, Connecticut families with very large estates — hedge fund principals, long-tenured executives, senior professionals with substantial real estate and retirement savings accumulated over decades — can find themselves in exactly this exposure zone.

Credit shelter trusts — necessary for Connecticut couples above $30M combined

A credit shelter trust (also called a bypass trust or "B trust") at the first spouse's death shelters assets up to the CT exemption ($15M) in trust for the surviving spouse's benefit. Those trust assets are not included in the survivor's CT taxable estate at second death. For Connecticut couples with combined estates above $30M, this is the foundational planning tool. For couples below $30M combined — which now includes most Connecticut families — outright marital bequests followed by the survivor's one $15M exemption will typically suffice, and the complexity of a credit shelter trust may not be justified.

Connecticut couples who drafted estate plans when the CT exemption was $2M–$7M (2016–2022) may have credit shelter trust provisions designed to fund to the then-current lower exemption. A trust that automatically funds to the "applicable CT exemption" will now capture $15M — potentially much more than was originally intended or appropriate given the family's actual estate size. Estate plan documents from this era should be reviewed by a Connecticut estate attorney to ensure the credit shelter funding formula still makes sense at the current $15M exemption level.

The CT gift tax and lifetime giving strategy

Because Connecticut is the only state with a gift tax, lifetime giving strategy in CT has a distinct character. Here is how the economics work at various estate sizes:

Annual exclusion gifts — full benefit, no CT gift tax

The federal annual gift exclusion ($19,000 per recipient in 2026, per IRS Rev. Proc. 2025-67) applies equally to Connecticut. Gifts at or below $19,000 per recipient per year are not taxable gifts under federal law and are therefore not subject to Connecticut gift tax. These gifts permanently remove assets from the Connecticut gross estate with zero CT consequence. For Connecticut families with estates modestly above $15M who want to reduce below the CT taxable threshold, annual exclusion gifting is the cleanest tool:

• A married couple with four adult children can give $19,000 × 4 × 2 = $152,000 per year with no federal gift tax return and no CT gift tax.
• Over 10 years: $1,520,000 permanently removed from the CT estate tax base.
• Over 20 years: $3,040,000 removed — potentially pushing an estate that was modestly above $15M back below the threshold.

Gifts above the annual exclusion — no CT advantage over dying with the asset

For taxable gifts (above the annual exclusion) where the total cumulative lifetime taxable gifts are below $15M, CT imposes no current gift tax — but each dollar of such gifts reduces the CT estate exemption at death by one dollar. The net Connecticut estate tax outcome is mathematically identical whether you give the asset away during life or retain it until death (both scenarios result in the same amount subject to CT estate tax, assuming no appreciation on the gifted asset after the gift date).

The federal advantage of lifetime gifting (removing post-gift appreciation from the estate) applies equally in Connecticut — if you give $1M of stock and it grows to $2M by your death, that $1M of growth is out of both your federal and CT estate at no additional cost. This "gift plus growth" strategy benefits CT residents just as it benefits federal taxpayers, but the gift itself doesn't create a state-level timing advantage beyond removing future appreciation.

Gifts above $15M lifetime — CT gift tax applies currently

Once cumulative lifetime taxable gifts exceed $15M, Connecticut levies the CT gift tax at 12% on the excess, paid on Form CT-706/709 filed currently (not deferred to death). For the rare ultra-high-net-worth Connecticut resident who wishes to deploy assets in excess of the $15M lifetime exemption during life, both federal gift tax (40%) and Connecticut gift tax (12%) apply — similar to the estate tax outcome, since the death taxes on the same amount would be the same 12% CT + 40% federal.

Filing requirements — who files, where, and when

Taxable estates: Form CT-706/709 → Connecticut DRS

If the Connecticut taxable estate (gross estate minus allowable deductions, adjusted for lifetime taxable gifts) exceeds $15,000,000, the executor must file Form CT-706/709 with the Connecticut Department of Revenue Services.³ Payment is due simultaneously. Extensions of time to file are available, but they do not extend the time to pay — tax owed accrues interest from the 6-month deadline. E-filing and payment are available through the myconneCT portal.

Non-taxable estates: Form CT-706 NT → Probate Court

Even when no Connecticut estate tax is owed, executors of Connecticut-domiciliary estates must file Form CT-706 NT with the Probate Court for the district in which the decedent resided.³ This filing documents that the estate is non-taxable and is required to close the probate proceeding. Failure to file CT-706 NT on time (6 months from death) can delay the estate's closing, hold up real estate transfers, and create administrative complications. The Probate Court controls a separate extension process (Form CT-706 NT EXT) from the DRS extension process for taxable estates.

Non-residents with Connecticut real estate

A non-resident decedent who owned Connecticut-situs real property or tangible personal property located in Connecticut must file Form CT-706 NT with the Probate Court for the district where that Connecticut property is located.³ If the prorated share of the Connecticut estate exceeds the threshold, Form CT-706/709 is required instead. New York City executives and investors who own Greenwich weekend homes, Litchfield County retreat properties, or Connecticut commercial real estate should be aware of this filing requirement.

Planning strategies to minimize Connecticut estate tax

1. Annual exclusion gifting — the most efficient CT tool

Annual exclusion gifts permanently remove assets from the CT estate tax base with no CT gift tax, no federal gift tax return required, and no recapture risk. For families with estates between $15M and $20M, a consistent multi-year annual exclusion gifting program — particularly as part of a broader financial plan — can eliminate the CT exposure entirely. The $19,000 per-recipient limit ($38,000 per couple using gift splitting) applies per person, so a couple with four children and six grandchildren can move $380,000 per year ($19K × 10 recipients × 2 spouses) out of the estate with no tax consequence.

2. 529 plan superfunding

The federal five-year election on 529 plan contributions allows up to $95,000 per beneficiary in 2026 (5 × $19,000) to be treated as five annual exclusion gifts, front-loaded in one year. This is an efficient way to remove a large lump sum from the Connecticut gross estate with no gift tax and no federal gift tax return required beyond the Form 709 election. A couple with four grandchildren can superfund $760,000 into 529 plans in a single year with no CT or federal gift tax consequence — while also providing for the grandchildren's education.

3. Credit shelter trusts for combined estates above $30M

As described above, credit shelter trusts at the first spouse's death preserve the first spouse's $15M CT exemption rather than letting it lapse into the surviving spouse's already-large estate. For couples where the combination of assets likely places the second death above $15M, a credit shelter trust funded to $15M can save $1.8M or more in Connecticut estate tax depending on subsequent appreciation. This is the foundational tool for Connecticut families above the $30M combined threshold.

4. Irrevocable Life Insurance Trusts (ILITs)

Life insurance owned by the decedent is included in the Connecticut gross estate under IRC §2042. An ILIT holds the policy outside both spouses' estates — the death benefit passes to trust beneficiaries without inclusion in either estate. For Connecticut families whose gross estate is close to $15M and whose estate includes a large life insurance policy, an ILIT can be the difference between zero CT estate tax and a meaningful CT estate tax bill. The 3-year look-back rule applies to transfers of existing policies; new policies purchased by the ILIT from inception avoid this concern.

5. Spousal Lifetime Access Trusts (SLATs)

A SLAT allows one spouse to gift assets irrevocably to a trust for the other spouse's benefit (and descendants), using federal and CT lifetime exemption. The trust assets are permanently removed from both gross estates. For Connecticut couples who want to use their large $15M federal/CT lifetime exemption efficiently during life — removing assets (and their future appreciation) from both estates — a SLAT can accomplish this while still providing indirect access to the assets through the spouse-beneficiary. Mutual SLATs must be structured to avoid the reciprocal trust doctrine.

6. Charitable strategies

Charitable bequests reduce the CT taxable estate under IRC §2055. A charitable remainder trust (CRT) removes the remainder interest from the CT gross estate, provides income during life, generates a partial charitable income tax deduction, and avoids capital gains on appreciated assets transferred to the CRT. For CT families with estates modestly above $15M who have charitable intent, a CRT can push the taxable estate below the CT threshold while also fulfilling charitable goals. See Charitable Giving from an Inheritance.

Approximate Connecticut estate tax by estate size

Connecticut's flat 12% rate on the excess above $15,000,000 makes the calculation relatively straightforward compared to graduated-rate states. The following table assumes a single decedent, no allowable deductions beyond the exemption, and no prior lifetime taxable gifts.¹

How Connecticut compares to other states with estate taxes

What Connecticut estate tax means if you're an heir

If you're inheriting from a Connecticut resident, here is what the state estate tax means in practical terms:

1. For most CT heirs in 2026, there is no Connecticut estate tax to worry about. With a $15M exemption matching federal, estates under $15M — the vast majority of Connecticut estates — owe nothing. The executor still files Form CT-706 NT with the Probate Court within 6 months, but no payment is required.
2. For estates above $15M, the executor handles CT estate tax from estate assets before distributions. You don't personally owe CT estate tax — it's paid at the estate level before you receive your inheritance. A $16M estate owes $120,000 in CT estate tax; that comes out of the estate before distributions are made to heirs.
3. Step-up in cost basis applies regardless of estate tax. Your inherited assets receive a new cost basis equal to date-of-death fair market value under IRC §1014, regardless of whether CT estate tax was owed. See Step-Up Basis Complete Guide and Step-Up Basis Calculator.
4. Only the decedent's half of jointly-held property gets a step-up. Connecticut is a common-law state — the surviving spouse's pre-existing 50% retains its original basis. Only the decedent's 50% steps up to date-of-death FMV.
5. IRAs and retirement accounts are included in the CT gross estate AND beneficiaries owe income tax on distributions. The IRA contributed to estate tax at death, and you also owe ordinary income tax on every dollar you withdraw over the 10-year rule. See Inherited IRA 10-Year Rule and the IRA Drawdown Optimizer.
6. Watch the 6-month CT filing deadline, not just the federal 9-month deadline. The executor may file federal Form 706 within 9 months. Connecticut's Form CT-706 NT (non-taxable) or CT-706/709 (taxable) is due within 6 months. If you're tracking estate administration milestones, the CT deadline is 3 months earlier than the federal deadline — and delays in CT Probate Court filing can hold up real estate transfers and final distributions.
7. Verify the estate plan's credit shelter trust provisions still make sense. If the decedent's estate plan was drafted when CT had a $2M–$7M exemption, it may contain credit shelter trust provisions designed to automatically fund to the "applicable CT exemption." At $15M, that could mean $15M flows into a trust structure designed for far less — potentially restricting assets in a way the decedent wouldn't have intended. A Connecticut estate attorney should review the plan documents before executing the trust funding.

Frequently asked questions

My parent died in Connecticut with a $12M estate. Is there Connecticut estate tax?

No. The Connecticut estate tax exemption is $15,000,000 per person in 2026. A $12M estate is fully exempt. The executor still needs to file Form CT-706 NT with the local Connecticut Probate Court within 6 months of death to close the estate — but no CT estate tax is owed and no payment is required.

My parent died in Connecticut with a $16M estate. How much Connecticut estate tax is owed?

Connecticut estate tax = ($16M − $15M) × 12% = $120,000. Federal estate tax = ($16M − $15M) × ~40% = ~$400,000. Total combined = ~$520,000. These are estimates before allowable deductions (marital deduction, charitable bequests, outstanding debts, mortgages, administration expenses). The actual figures depend on the estate's specific composition and available deductions. Form CT-706/709 must be filed with CT DRS within 6 months of death with payment due simultaneously.

Does Connecticut have an inheritance tax?

No. Connecticut has no inheritance tax based on the beneficiary's relationship to the decedent. The estate pays the estate tax before distributions; individual heirs don't owe Connecticut tax on what they receive. This distinguishes CT from states like New Jersey, Pennsylvania, Maryland, Nebraska, and Kentucky (for non-family beneficiaries), all of which impose inheritance taxes at the beneficiary level. See Inheritance Tax by State.

Does Connecticut allow spousal portability?

No. Connecticut does not recognize the federal DSUE spousal portability election. Each Connecticut estate has one $15M exemption; unused exemption cannot transfer to the surviving spouse. At the $15M level, this is primarily a concern for married couples with combined estates above $30M. A Connecticut couple below $30M combined — the large majority — can typically leave everything to the surviving spouse without any CT estate tax exposure at either death, since the survivor will also have a $15M CT exemption at their own death.

I live in New York but own a Connecticut vacation home. Do I owe Connecticut estate tax?

Potentially. Connecticut imposes estate tax on Connecticut-situs real property owned by non-residents, prorated based on the ratio of the CT property value to your total gross estate. If your total estate is $20M and the CT property is worth $2M (10% of the estate), Connecticut would compute estate tax on a prorated share of the estate attributable to the Connecticut real property. The estate exceeds the $15M CT exemption, so there may be Connecticut estate tax. An executor handling this estate should engage a Connecticut estate attorney to evaluate the CT exposure and ensure the CT Probate Court filing is made within 6 months of death.

If I make large lifetime gifts to reduce my Connecticut estate, does Connecticut tax those gifts?

Yes — but only once your cumulative lifetime taxable gifts exceed the $15M exemption. Gifts above the annual exclusion ($19,000 per recipient in 2026) reduce your remaining CT estate exemption dollar for dollar. If you've made $14M in prior taxable gifts and make a $2M gift today, CT levies its 12% gift tax on the $1M excess above your $15M lifetime exemption. For estates below $15M total (including prior gifts), no CT gift tax is ever owed — but large lifetime gifts don't produce the same state estate tax savings they do in states without gift taxes (like Massachusetts), because the CT exemption is reduced by the same amount. Annual exclusion gifts avoid all of this and permanently reduce the CT estate tax base.

My parent's estate plan was drafted in 2017 with a credit shelter trust. Is it still correct?

Possibly not — this is one of the most common estate plan update needs in Connecticut right now. Plans drafted in 2017 were likely designed around a CT exemption of $2,000,000–$5,100,000. If the trust provisions automatically fund to the "applicable CT exemption," they will now capture $15,000,000 — an amount that may be far more than the surviving spouse can afford to have locked in trust rather than accessible outright. A Connecticut estate attorney should review the credit shelter trust formula clause, evaluate whether the marital bequest and trust funding still achieves the intended balance, and consider whether the plan needs to be updated with a "disclaimer trust" structure that gives the surviving spouse flexibility to decide at the first death how much to put in trust and how much to take outright.

Get matched with an advisor who understands Connecticut estate planning

Connecticut's estate tax is no longer the middle-class trap it was a decade ago — a $15M exemption means most CT families face zero state estate tax. But for those above the threshold, the combination of a flat 12% CT rate, no portability, and the only state gift tax in the country creates a specific and complex planning environment. A fee-only financial advisor specializing in inheritance and estate planning can model your Connecticut estate tax exposure under current law, evaluate whether your credit shelter trust provisions still make sense at the $15M level, coordinate an annual exclusion gifting strategy to reduce the CT estate tax base, and help you understand whether the 6-month CT filing deadline is likely to create any issues for your heirs. The right specialist has handled this before and knows both the federal and Connecticut rules that apply to your situation.