Connecticut Estate Tax: Rates, Exemptions, and Filing

The Connecticut estate tax applies only to estates valued above the federal basic exclusion amount, which is $15 million for deaths in 2026. Above that threshold, the state taxes the excess at a flat 12%. The return and the payment are both due six months after the date of death, and executors of estates at or below the threshold still have paperwork to file with the probate court even though no tax is owed.

The 2026 Exemption Threshold

Connecticut’s exemption is tied by statute to the federal basic exclusion amount.¹ For 2026, that figure is $15 million.² The 2025 threshold was $13.99 million and the 2024 threshold was $13.61 million, so fewer Connecticut estates will owe tax in 2026 than in recent years.

The increase came from the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, which set the federal amount at $15 million for 2026 rather than letting the scheduled sunset drop it to roughly $7 million.³ Because Connecticut’s exemption follows the federal number automatically, the state threshold rose with it.

The Flat 12% Rate

Since January 1, 2023, Connecticut has applied a single 12% rate to the portion of the taxable estate exceeding the exemption.⁴ The older graduated brackets no longer apply. For a 2026 death, an estate worth $16 million would owe 12% on the $1 million above $15 million, or $120,000.

Connecticut also caps the combined gift and estate tax at $15 million per taxpayer, though very few estates reach that ceiling.¹

What Goes Into the Taxable Estate

The Connecticut taxable estate begins with the federal gross estate: real property, bank accounts, investments, business interests, retirement accounts, and personal property. Federal deductions come off that total. Then two items are added back in:¹

All Connecticut taxable gifts the decedent made on or after January 1, 2005, unless already included in the federal gross estate.
Any Connecticut gift tax paid by the decedent or the estate on gifts made within three years of death.

The lifetime add-back is the provision that catches people off guard. A gift made twenty years ago can still increase the Connecticut taxable estate today, provided it was made after January 1, 2005.⁴

Deductions That Reduce the Tax

Marital Deduction

Assets passing to a surviving spouse who is a U.S. citizen qualify for an unlimited marital deduction. This can eliminate Connecticut estate tax entirely at the first death, though it effectively defers the tax to the surviving spouse’s estate. If the surviving spouse is not a U.S. citizen, assets must pass through a Qualified Domestic Trust to receive comparable treatment.

Charitable Bequests

Gifts to qualifying charities, nonprofits, and foundations that meet IRS tax-exempt criteria are fully deductible from the taxable estate.

Life Insurance Owned by an Irrevocable Trust

Life insurance proceeds payable to the estate, or on policies the decedent owned, are included in the gross estate. A policy owned by an irrevocable life insurance trust stays outside the taxable estate, provided the trust was set up and funded correctly and the policy generally was not transferred to the trust within three years of death.

Credit for Property Taxed in Another State

A Connecticut resident who owned real estate or tangible personal property in another state receives a credit against the Connecticut estate tax for that out-of-state property, which prevents full double taxation when the other state also imposes an estate tax.¹

Connecticut Does Not Allow Portability

Federal law lets a surviving spouse claim the deceased spouse’s unused federal exemption through a portability election, which can shelter up to $30 million from federal estate tax in 2026 for a married couple.⁵ Connecticut has no equivalent. Each spouse’s $15 million Connecticut exemption belongs to that spouse alone and cannot be transferred.

The practical consequence: a plan that leaves everything to the surviving spouse under the marital deduction uses the first spouse’s Connecticut exemption not at all. When the surviving spouse later dies with a combined estate above $15 million, Connecticut taxes the full excess at 12%. Couples with assets near or above the threshold often use credit shelter trusts or similar structures to preserve both exemptions.

Connecticut’s Gift Tax

Connecticut is one of the few states with its own gift tax, and it runs on the same unified system as the estate tax: same $15 million lifetime threshold, same flat 12% rate on the excess.¹ All Connecticut taxable gifts made on or after January 1, 2005 accumulate against the exemption.

Because those lifetime gifts are added back to the taxable estate at death, any Connecticut gift tax already paid generates a credit against the estate tax, preventing double taxation on the same dollars. Gift tax returns and estate tax returns use the same form, CT-706/709. Gift tax returns are due April 15 of the year after the gift.⁶

Filing Requirements

Taxable Estates: Form CT-706/709

When the Connecticut taxable estate exceeds the exemption, the executor files Form CT-706/709 with the Connecticut Department of Revenue Services within six months of death.⁶ Copies of any federal Form 706 and Form 709 must be attached, along with documentation for asset values, liabilities, and deductions. A copy of the return also goes to the appropriate Connecticut Probate Court.

An executor can request a nine-month extension to file using Form CT-706/709 EXT, but the extension does not push back the payment deadline.

Nontaxable Estates: Form CT-706 NT

Estates at or below the exemption owe no tax and file nothing with DRS, but the executor must still file Form CT-706 NT with the Connecticut Probate Court.⁷ The probate court uses this filing to issue a certificate releasing the estate tax lien on real property. Without that certificate, real estate cannot be cleanly transferred or sold.

Federal Form 706

A separate federal return, Form 706, is required for estates above the federal $15 million threshold and is due within nine months of death.⁸ Even estates well below that threshold sometimes file Form 706 solely to elect federal portability, which is available up to five years after death under Revenue Procedure 2022-32.⁵

Payment Deadline and Methods

Connecticut estate tax is due within six months of the date of death, three months earlier than the federal deadline.⁹ Filing and payment share the same six-month clock.

Payment can be made electronically through myconneCT or by check with the paper return.⁶ An executor who needs more time to pay can request a six-month extension, but interest at 1% per month runs from the original due date regardless. An extension of time to file (nine months) is not an extension of time to pay.

When the estate is asset-rich and cash-poor, the executor may need to sell property or arrange financing before the six-month mark. There is no Connecticut equivalent of the federal installment option under 26 U.S.C. 6166 for estates largely tied up in a closely held business.¹⁰

Penalties and Interest for Late Payment

Missing the six-month deadline triggers a penalty of 10% of the unpaid tax or $50, whichever is greater.⁹ Interest then accrues at 1% per month, or any fraction of a month, from the original due date until the tax is paid in full. An approved payment extension does not stop interest; it keeps running from the date the tax would otherwise have been due.

On a $200,000 bill, the 10% penalty alone is $20,000, with another $2,000 of interest for each month that passes. Executors who expect the estate to owe tax should start assembling liquid funds early rather than waiting for the final numbers.

Step-Up in Basis for Heirs

Beneficiaries who inherit assets receive a basis equal to the fair market value on the date of death.¹¹ Appreciation that occurred during the decedent’s lifetime is wiped out for income tax purposes. Stock a parent bought for $50,000 that is worth $500,000 at death has a $500,000 basis in the beneficiary’s hands; an immediate sale produces no capital gain.

Inherited property also qualifies automatically for long-term capital gain treatment regardless of holding period, which matters because long-term rates are lower than short-term rates for most taxpayers. The step-up applies to all inherited assets, not just those in taxable estates.

1
Connecticut Department of Revenue Services. Estate and Gift Tax Information
2
Internal Revenue Service. What’s New — Estate and Gift Tax
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
4
Connecticut General Assembly. Estate, Inheritance, and Gift Taxes in CT and Other States
5
Internal Revenue Service. Instructions for Form 706
6
State of Connecticut Department of Revenue Services. Form CT-706/709 Line Instructions 2025
7
Connecticut State Department of Revenue Services. CT-706 Series – Forms and Instructions
8
Internal Revenue Service. Filing Estate and Gift Tax Returns
9
Justia. Connecticut Code 12-392 – Tax on Transfer of Property of Resident Decedent
10
Office of the Law Revision Counsel. 26 USC 6166 – Extension of Time for Payment of Estate Tax Where Estate Consists Largely of Interest in Closely Held Business
11
Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent