The Connecticut estate tax applies at a flat 12% rate on the portion of an estate that exceeds the federal basic exclusion amount, which is $15 million for 2026 deaths. Estates at or below that threshold owe no Connecticut estate tax. The return and payment are both due six months after the date of death, a deadline three months tighter than the federal one.
Who Owes Connecticut Estate Tax
Connecticut’s exemption is tied by statute to the federal basic exclusion amount.1Connecticut Department of Revenue Services. Estate and Gift Tax Information For 2026 that figure is $15 million per person, up from $13.99 million in 2025 and $13.61 million in 2024.2Internal Revenue Service. What’s New — Estate and Gift Tax The jump comes from the One, Big, Beautiful Bill Act signed on July 4, 2025, which set the federal exclusion at $15 million for 2026 instead of letting it sunset to roughly $7 million.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Because Connecticut tracks the federal number, the state exemption moved automatically.
Fewer Connecticut estates will owe tax in 2026 than in prior years. But the threshold is a floor, not a shield: an estate valued at $16 million pays 12% on the $1 million above the line, or $120,000.
How the Taxable Estate Is Calculated
The Connecticut taxable estate starts with the decedent’s federal gross estate — real estate, bank accounts, investments, business interests, retirement accounts, and personal property. Federal deductions come off that total. Then two items get added back in:1Connecticut Department of Revenue Services. Estate and Gift Tax Information
- All Connecticut taxable gifts the decedent made on or after January 1, 2005, unless those gifts are already in the federal gross estate.
- Any Connecticut gift tax the decedent or the estate paid on gifts made during the three years before death.
The 2005 add-back means Connecticut’s reach extends well beyond what the person owned at death. Gifts made two decades ago can still increase the taxable estate. The three-year gift-tax add-back is a separate rule that stops deathbed gifting from shrinking both the estate and the tax paid on it.4Connecticut General Assembly. Estate, Inheritance, and Gift Taxes in CT and Other States
Assets are usually valued at their fair market value on the date of death. Executors can elect an alternate valuation date six months later if that election both reduces the gross estate and reduces the combined estate tax.5Office of the Law Revision Counsel. 26 U.S. Code 2032 – Alternate Valuation Property sold or distributed inside that six-month window is valued at the date of the transaction.
The 12% Flat Rate
Connecticut has applied a flat 12% rate on the taxable estate above the exemption since January 1, 2023.4Connecticut General Assembly. Estate, Inheritance, and Gift Taxes in CT and Other States Earlier graduated brackets running from 10.8% to 12% are gone. The state also caps combined lifetime gift and estate tax at $15 million per taxpayer, a ceiling that matters only for very large estates.1Connecticut Department of Revenue Services. Estate and Gift Tax Information
Deductions That Reduce the Taxable Estate
Unlimited Marital Deduction
Assets passing to a surviving spouse who is a U.S. citizen are fully deductible. This can wipe out the Connecticut estate tax at the first death, though it defers rather than eliminates the tax: whatever the surviving spouse still holds gets taxed at that spouse’s death. When the surviving spouse is not a U.S. citizen, the assets must pass through a Qualified Domestic Trust to get the same deferred treatment.
Charitable Bequests
Gifts to qualifying charities, nonprofits, and certain foundations are fully deductible. The receiving organization must meet IRS tax-exempt criteria.
Life Insurance Held in an Irrevocable Trust
Life insurance proceeds are included in the gross estate when they are paid to the estate or the decedent held ownership rights over the policy. A policy owned by a properly structured and funded irrevocable life insurance trust stays outside the taxable estate. The decedent generally cannot have transferred the policy into the trust within three years of death.
Credit for Property Taxed in Another State
Connecticut residents who own real estate or tangible personal property in other states get a credit against Connecticut estate tax for those assets, so the same property isn’t fully taxed twice.1Connecticut Department of Revenue Services. Estate and Gift Tax Information The estate may still need to file in the other state.
Connecticut’s Gift Tax Works With the Estate Tax
Connecticut is one of a small number of states that imposes its own gift tax, and it runs as a unified system with the estate tax. Same $15 million exemption, same 12% flat rate on the excess.1Connecticut Department of Revenue Services. Estate and Gift Tax Information The exemption is cumulative: every Connecticut taxable gift made on or after January 1, 2005, counts toward the threshold.
Because lifetime gifts are added back into the Connecticut taxable estate at death, any Connecticut gift tax already paid becomes a credit against the estate tax, avoiding double taxation. Gift tax returns use the same Form CT-706/709 as estate returns and are due April 15 of the year after the gift.6State of Connecticut Department of Revenue Services. Form CT-706/709 Line Instructions 2025
No Portability Between Spouses
At the federal level, a surviving spouse can inherit the deceased spouse’s unused exemption through a portability election on Form 706, which lets a married couple potentially shelter up to $30 million from federal estate tax in 2026.7Internal Revenue Service. Instructions for Form 706 Connecticut does not offer portability. Each spouse’s $15 million exemption belongs to that spouse alone.
The practical effect: an estate plan that relies purely on the marital deduction can waste the first spouse’s Connecticut exemption. If the surviving spouse then dies with combined assets above $15 million, the excess is fully exposed to the 12% state tax. Couples with substantial assets often use credit shelter trusts or similar structures to preserve both exemptions.
Filing Requirements
Taxable Estates — Form CT-706/709
If the Connecticut taxable estate exceeds $15 million for a 2026 death, the executor files Form CT-706/709 with the Department of Revenue Services no later than six months after the date of death.6State of Connecticut Department of Revenue Services. Form CT-706/709 Line Instructions 2025 A complete copy of any federal Form 706 and Form 709 must be attached, along with valuation documentation, liabilities, and deduction support. A copy of the return also goes to the appropriate Connecticut Probate Court.
Executors can request a nine-month filing extension on Form CT-706/709 EXT. The extension pushes the filing deadline back; it does not extend the payment deadline.
Nontaxable Estates — Form CT-706 NT
When the taxable estate is at or below the exemption, no tax is owed and no DRS filing is required. The executor still files Form CT-706 NT with the Connecticut Probate Court.8Connecticut State Department of Revenue Services. CT-706 Series – Forms and Instructions The court uses that filing to issue a certificate releasing the estate tax lien on real property, which has to happen before real estate can be transferred or sold. Skipping this step can stall property transactions for months.
Federal Form 706
Separately, estates above the federal basic exclusion amount ($15 million for 2026 deaths) must file federal Form 706 with the IRS within nine months of death.9Internal Revenue Service. Filing Estate and Gift Tax Returns Estates below the federal threshold may still want to file Form 706 to elect federal portability.
Payment Deadline and Methods
Connecticut estate tax is due within six months of the date of death — three months earlier than the federal deadline, and a detail executors often miss.10Justia. Connecticut Code 12-392 – Tax on Transfer of Property of Resident Decedent Filing and payment run on the same clock.
Payments can be made through myconneCT, the state’s online tax portal, or by mailing a check with the return.6State of Connecticut Department of Revenue Services. Form CT-706/709 Line Instructions 2025 Executors can request a six-month payment extension, but interest still accrues from the original due date at 1% per month.
If the estate is asset-rich and cash-poor, the executor may need to sell property or arrange financing to cover the tax within six months.
Penalties for Missing the Deadline
Late filing or payment triggers a penalty of 10% of the unpaid tax or $50, whichever is greater.10Justia. Connecticut Code 12-392 – Tax on Transfer of Property of Resident Decedent Interest then accrues at 1% per month (or any fraction of a month) from the original due date until the tax is fully paid. An approved extension to pay does not stop interest from running.
The numbers compound quickly. On a $200,000 tax bill, the 10% penalty alone is $20,000, and each additional month adds another $2,000 in interest. Executors expecting a tax bill should line up liquid assets early rather than wait for the return to be finalized.
What Beneficiaries Get: Step-Up in Basis
Heirs receive a stepped-up cost basis equal to the fair market value of the inherited property on the date of death, or on the alternate valuation date if elected.11Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent Appreciation during the decedent’s lifetime escapes capital gains tax. Stock a parent bought for $50,000 that’s worth $500,000 at death has a $500,000 basis in the beneficiary’s hands; selling right away produces no capital gain.
Inherited property also automatically qualifies for long-term capital gain treatment no matter how long the beneficiary holds it, which matters because long-term rates are considerably lower than short-term rates for most taxpayers. The step-up applies to all inherited assets, not only those in taxable estates.