Connecticut Gift Tax: Exemption, Rate, and Filing Form CT-706/709

Connecticut is the only state with its own gift tax. For 2026, you can give away up to $15 million over your lifetime before the Connecticut gift tax applies, and anything above that is taxed at a flat 12%.¹ Even gifts well below that threshold may require you to file Form CT-706/709 with the Department of Revenue Services by April 15 of the following year.²

What Counts as a Gift

Connecticut uses the same definition the federal government uses: any transfer of money or property where you don’t get something of equal value back.³ Cash, real estate, stocks, and other investments all qualify. So do transfers that don’t feel like gifts in everyday language. Forgiving a loan, selling property to a relative for less than it’s worth, or adding someone to a bank account with survivorship rights can all count.

The tax tracks cumulative lifetime giving, not any single year’s total. Connecticut adds up all your taxable gifts over time and only applies the tax once your running total crosses the exemption.

Who Connecticut Can Tax

Whether Connecticut cares about a gift depends on where you live and what you’re giving.

If you’re a Connecticut resident, the tax reaches real estate and tangible property located in Connecticut, plus intangible property (stocks, bonds, bank accounts, business interests) wherever it sits.⁴ A Connecticut resident gifting shares in a California company has to report it. Real estate or physical property you own outside Connecticut, however, is not subject to the state’s gift tax.³

If you live elsewhere, Connecticut’s gift tax only reaches real estate and tangible property physically located in the state.⁴ A New York resident gifting a Connecticut vacation home owes Connecticut gift tax; gifting a brokerage account does not trigger anything in Connecticut.

The $15 Million Exemption and the 12% Rate

Connecticut’s lifetime exemption is tied to the federal exemption, which is $15 million per person in 2026.⁵ That number went up from $13.99 million in 2025 after the One, Big, Beautiful Bill Act, signed July 4, 2025, permanently raised the federal basic exclusion and indexed it for inflation.

Once your lifetime taxable gifts cross $15 million, the excess is taxed at a flat 12%.¹ The rate has been flat since January 1, 2023. Older guides that reference graduated rates starting at 7.2% are out of date.

One boundary worth knowing for very large estates: Connecticut caps the combined gift and estate tax any one person can owe at $15 million total.⁴ The cap counts gift tax paid on gifts made on or after January 1, 2016, plus any estate tax owed at death.

Gifts That Don’t Count Against Your Exemption

Most givers never approach the $15 million line because so many transfers are excluded outright.

The Annual Exclusion

For 2026, you can give any one person up to $19,000 without the gift being taxable or reportable in Connecticut.⁵ Married couples who elect gift splitting on their federal return can effectively give $38,000 per recipient. The exclusion resets each calendar year and there’s no limit on how many people you can give to. Transfers into UTMA and UGMA custodial accounts qualify.

Direct Tuition and Medical Payments

Pay a school directly for someone’s tuition, or pay a medical provider directly for someone’s care, and the payment isn’t treated as a gift at all. The word “directly” matters. If you give the money to your grandchild and she pays the tuition, it’s a gift. If you write the check to the university, it’s excluded. The same rule covers health insurance premiums paid straight to the insurer.

529 Plan Front-Loading

Connecticut follows the federal rule allowing five years of annual exclusion gifts to be made at once into a 529 plan. For 2026, that’s up to $95,000 per beneficiary in a single year, or $190,000 if you and your spouse both elect gift splitting, as long as you don’t make additional gifts to that beneficiary during the five-year window.⁶ You report the contribution spread evenly over five years on both federal and Connecticut returns. If you die inside the five years, part of the contribution gets pulled back into your estate.

Gifts to Spouses

Gifts to a U.S. citizen spouse are unlimited and fully exempt. If your spouse is not a U.S. citizen, you get a special annual exclusion instead: $194,000 of present-interest gifts in 2026, with anything above that counting as a taxable gift.⁷

Charitable Gifts

Donations to IRS-recognized charities are fully deductible for gift tax purposes at both the federal and Connecticut level, and don’t eat into your lifetime exemption.

Filing Form CT-706/709

If you make any taxable gift during the year, meaning any gift above the $19,000 annual exclusion that isn’t otherwise exempt, you have to file Form CT-706/709 with the Department of Revenue Services.² You file even if you owe no tax because your lifetime total is still under the exemption. Gifts entirely within the annual exclusion don’t require a Connecticut return.

The return is due April 15 of the year after the gift. Gifts made in 2025 are reported by April 15, 2026.⁴ When April 15 falls on a weekend or holiday, the deadline moves to the next business day.

You can get more time to file by submitting Form CT-706/709 EXT, but the extension only delays the paperwork. It does not extend the payment deadline. If you expect to owe gift tax, pay the full estimated amount by April 15 with the extension request.² Returns can be filed electronically through myconneCT or on paper.

Penalties for Late Payment or Failure to File

Miss the payment deadline and two charges hit. The penalty is 10% of the unpaid tax or $50, whichever is greater.⁴ Interest then runs at 1% per month on the unpaid balance from the original due date until you pay in full.⁸ On a large bill, 12% annual interest adds up quickly.

If the Department determines you intentionally failed to report gifts, consequences escalate. Deliberate concealment can bring additional civil penalties and, in serious cases, criminal prosecution for tax evasion. The state can also place liens on property, garnish wages, and seize assets to collect unpaid gift tax.

How Lifetime Gifts Affect Your Estate Tax

Connecticut’s gift tax and estate tax are unified. Every dollar of taxable gifts you make during life reduces the exemption your estate has at death. When Connecticut calculates your taxable estate, it adds back all Connecticut taxable gifts made on or after January 1, 2005, that aren’t already in your federal gross estate.⁴ Your estate gets credit for any Connecticut gift tax you already paid, so the same dollars aren’t taxed twice.

Connecticut does not offer portability between spouses. Under federal rules, a surviving spouse can inherit a deceased spouse’s unused exemption. Connecticut has no equivalent. Each spouse uses their own $15 million exemption, and whatever one spouse doesn’t use is lost at death. For married couples with significant assets, that absence changes how gifts should be timed and allocated between the two of you.

1
Connecticut General Assembly Office of Legislative Research. Estate, Inheritance, and Gift Taxes in CT and Other States
2
Department of Revenue Services. Connecticut Estate and Gift Tax – General Instructions 2024
3
Connecticut General Assembly. Chapter 228c – Gift Tax
4
Connecticut State Department of Revenue Services. Estate and Gift Tax Information
5
Internal Revenue Service. What’s New — Estate and Gift Tax
6
Internal Revenue Service. Instructions for Form 709
7
Department of Revenue Services. Form CT-706/709 Line Instructions
8
Connecticut General Assembly Office of Legislative Research. Interest Rates on State and Local Tax Underpayments and Overpayments