Connecticut Estate Tax: Rates, Thresholds, and the $15M Cap

The Connecticut estate tax applies to the transfer of assets at death for Connecticut residents and for nonresidents who own Connecticut real or tangible personal property. Governed by CGS 12-391 et seq., the tax has changed frequently over the past two decades, with shifting exemptions, evolving rate structures, and the introduction of a maximum tax cap. This page covers the current rules and the history behind them.

Current Exemption (Deaths On or After January 1, 2023)

For decedents dying on or after January 1, 2023, the Connecticut estate tax exemption equals the federal basic exclusion amount. For 2025, the federal basic exclusion amount is approximately $13.99 million (indexed for inflation). Estates with a Connecticut taxable estate at or below this threshold owe no Connecticut estate tax, though a return must still be filed with the probate court.

This represents the final step in a long march toward alignment with the federal exemption. As recently as 2017, the Connecticut exemption was $2 million.

The Connecticut Taxable Estate

The Connecticut taxable estate is not simply the gross estate minus deductions. Under CGS 12-391, the Connecticut taxable estate equals the gross estate, less allowable deductions, plus the aggregate of Connecticut taxable gifts made on or after January 1, 2005. This “clawback” of lifetime gifts into the taxable estate is a critical distinction. Connecticut has a unified gift and estate tax; gifts made during life that exceed the annual exclusion reduce the estate tax exemption available at death.

Rate Schedule

For decedents dying on or after January 1, 2023, the rate is a flat 12% on the amount of the Connecticut taxable estate that exceeds the federal basic exclusion amount. Earlier rate schedules were graduated, with rates ranging from 7.2% to 12%, but the current structure is simplified.

For context, here is how the rate schedule has evolved for different death-date ranges:

The steady increase from $2 million to the federal exclusion amount reflects a legislative decision to reduce the number of estates subject to Connecticut estate tax while maintaining the tax on the wealthiest estates.

The $15 Million Tax Cap

For decedents dying on or after January 1, 2019, the maximum Connecticut estate tax payable is capped at $15 million, regardless of the size of the estate (CGS 12-391). This means that even a $1 billion estate pays no more than $15 million in Connecticut estate tax.

The cap has a dramatic effect on the effective tax rate for very large estates. An estate of $200 million, for example, pays a flat $15 million, yielding an effective rate of 7.5%. An estate of $500 million pays the same $15 million, for an effective rate of 3%.

For estates between the exemption amount and approximately $139 million (at the 12% rate, the tax reaches $15 million at roughly that level), the cap has no effect. The cap benefits only the largest estates.

For deaths between January 1, 2016 and December 31, 2018, the cap was $20 million. PA 18-49 reduced it to $15 million for deaths on or after January 1, 2019.

Filing Requirements

A Connecticut estate tax return must be filed in every case where the decedent was a Connecticut resident at death or a nonresident who owned Connecticut real or tangible personal property (CGS 12-392).

Which form. Estates with a Connecticut taxable estate above the exemption threshold file Form CT-706/709 with both the Department of Revenue Services (DRS) and the probate court. Estates at or below the exemption threshold file Form CT-706 NT (no tax) with the probate court only. The probate judge reviews the return and issues a written opinion that no tax is due.

Filing deadline. For decedents dying on or after July 1, 2009, the return and payment are due six months after the date of death (CGS 12-392(a)(1)). This is different from the federal estate tax return deadline, which is nine months after death. Practitioners must track both deadlines carefully.

Extension. The Commissioner of Revenue Services may grant an extension of time for filing the return or paying the tax for reasonable cause (CGS 12-392(a)(2), (b)(6)). An extension of time to file does not extend the time to pay; interest accrues on unpaid tax from the original due date.

Payment and Penalties

The tax is payable to the Commissioner of Revenue Services at the expiration of six months from the date of death (for deaths on or after July 1, 2009). Executors, administrators, trustees, and beneficiaries are all potentially liable for the tax.

Late payment triggers a penalty of 10% of the unpaid amount (or $50, whichever is greater) plus interest at 1% per month from the due date until payment (CGS 12-392(a)(1)). The Commissioner may waive penalties for reasonable cause but does not have to.

QTIP Election Differences

Connecticut allows a QTIP (Qualified Terminable Interest Property) election that is separate from the federal QTIP election (CGS 12-391). This is significant for estate planning.

At the federal level, a QTIP election defers estate tax on property passing in trust for the surviving spouse, with the property included in the surviving spouse’s estate at the spouse’s later death. The executor can make the election or not, depending on the tax consequences.

Connecticut permits the executor to make a different QTIP election for state estate tax purposes than for federal purposes. This creates planning opportunities:

• The executor might make a federal QTIP election but not a Connecticut QTIP election (or vice versa) to optimize the combined tax burden.
• A “state-only QTIP” trust can be funded with the difference between the federal and Connecticut exemptions (when they diverged), allowing the trust to pass free of Connecticut estate tax at the first spouse’s death while preserving the full federal exemption.

For deaths on or after January 1, 2023, where the Connecticut and federal exemptions are aligned, the state-only QTIP technique is less relevant. But it remains important for estates that were planned during the years when the exemptions diverged, and for situations where the federal exemption may decrease in the future (the federal exemption is scheduled to be reduced by approximately half after December 31, 2025, unless Congress acts).

Brief History of the Connecticut Estate Tax

Connecticut’s estate tax has been a moving target.

Before 2005. Connecticut imposed both a succession and transfer tax (Chapter 216) and an estate tax that was largely a “sponge tax” designed to absorb the federal credit for state death taxes. When the federal government phased out the state death tax credit starting in 2001, Connecticut replaced the sponge tax with a standalone estate tax.

2005-2009. The standalone estate tax launched with a $2 million exemption and graduated rates. The succession tax was sunset for deaths after January 1, 2005.

2010. A temporary increase to $3.5 million.

2011-2017. The exemption dropped back to $2 million, where it sat for seven years. During this period, the gap between the federal exemption (which climbed from $5 million to $5.49 million) and the Connecticut exemption ($2 million) created significant planning challenges.

2018-2022. The legislature began a phased increase: $2.6 million (2018), $3.6 million (2019), $5.1 million (2020), $7.1 million (2021), $9.1 million (2022). The $15 million cap was introduced for deaths on or after January 1, 2019.

2023 and after. The exemption was linked to the federal basic exclusion amount, and the rate was simplified to a flat 12%.

This history matters because estates of decedents who died in earlier years but are still in administration are subject to the law in effect at the date of death, not the current law. An estate from 2017 still faces a $2 million exemption and graduated rates, even if the fiduciary does not resolve the tax liability until 2025.

Key Differences from the Federal Estate Tax

• Exemption. Currently aligned (both equal to the federal basic exclusion amount), but this will diverge if the federal exemption is reduced in 2026.
• Portability. The federal estate tax allows a surviving spouse to use the deceased spouse’s unused exemption (“portability”). Connecticut does not. Unused Connecticut exemption is lost at the first spouse’s death.
• Filing deadline. Federal: nine months. Connecticut: six months.
• QTIP election. Can be made independently for federal and Connecticut purposes.
• Tax cap. Connecticut caps the tax at $15 million. There is no comparable federal cap.
• Gift tax clawback. Connecticut adds aggregate taxable gifts made on or after January 1, 2005 to the taxable estate. The federal computation includes lifetime gifts as well, but using a different methodology.

Planning Implications

The current alignment of exemptions does not mean estate tax planning is unnecessary for Connecticut residents. The federal exemption is scheduled to be cut roughly in half after 2025 if Congress does not act. If that happens, the Connecticut exemption (which is tied to the federal amount) will drop as well, potentially bringing many more estates into the taxable range.

Lack of portability in Connecticut means married couples must plan deliberately to use both spouses’ exemptions. A credit shelter trust (bypass trust) funded at the first spouse’s death remains a common technique, even though federal portability has reduced its importance for federal tax purposes.

The $15 million cap benefits only estates large enough to generate more than $15 million in tax. For most taxable estates, the cap is irrelevant, and the full 12% rate applies to every dollar over the exemption.

For how the Connecticut and federal estate taxes interact, see federal-CT estate tax interaction. For gifting strategies that reduce the taxable estate, see gifting strategies for Connecticut estate tax planning. For the tax clearance process, see obtaining estate tax clearance in Connecticut. For estates of decedents who died before 2005, the older succession and transfer tax may still apply. For how estate taxes are divided among beneficiaries, see estate tax proration in Connecticut.

Planning strategies to reduce estate tax exposure often involve irrevocable trusts such as ILITs and GRATs, or revocable living trusts to avoid probate and its associated costs.