Connecticut is the only state with its own gift tax on top of the federal one. For 2026, the Connecticut gift tax exempts the first $15 million of lifetime taxable gifts per person and taxes anything above that at a flat 12%. Even when no tax is owed, gifts that exceed the annual exclusion of $19,000 per recipient must be reported to the Connecticut Department of Revenue Services on Form CT-706/709.
What Counts as a Gift
Connecticut uses the federal definition: a gift is any transfer of money or property where you don’t get something of equal value back.1Connecticut General Assembly. Chapter 228c – Gift Tax Cash, real estate, stocks, and other investments qualify. So do transfers that don’t look like gifts on the surface. Forgiving a debt counts. Selling a house to your child for less than it’s worth counts, at least for the discount. Adding someone to a bank account with survivorship rights can count too.
The tax works on cumulative lifetime totals, not year-by-year snapshots. Connecticut keeps a running tally of every taxable gift you make, and tax is only owed once that total crosses the exemption. A string of moderate gifts over many years can eventually create a bill if they add up.
The $15 Million Exemption and 12% Rate
Connecticut’s lifetime exemption tracks the federal basic exclusion amount. For 2026, that figure is $15 million per individual, up from $13.99 million in 2025 after the One, Big, Beautiful Bill Act permanently raised the federal exclusion and indexed it for inflation.2Internal Revenue Service. What’s New — Estate and Gift Tax Because Connecticut ties its number to the federal one, the state exemption rose automatically.
Anything above $15 million in cumulative lifetime taxable gifts is taxed at a flat 12%.3Connecticut General Assembly Office of Legislative Research. Estate, Inheritance, and Gift Taxes in CT and Other States The flat rate has been in place since January 1, 2023. Older guides still reference the graduated schedule that started at 7.2%; those rates no longer apply.
What’s Excluded
Several categories of transfers escape the tax without eating into the $15 million lifetime exemption.
The Annual Exclusion
For 2026, you can give up to $19,000 per recipient per year without the gift being taxable or reportable in Connecticut.2Internal Revenue Service. What’s New — Estate and Gift Tax Married couples who elect gift splitting on their federal return can effectively give $38,000 per recipient. There’s no cap on the number of people you can give to, and the limit resets each January 1. UTMA and UGMA custodial account transfers qualify because the IRS treats them as present-interest gifts.
Direct Tuition and Medical Payments
Payments made directly to a school for tuition or to a medical provider for care are not gifts at all. The word “directly” is doing the work. Write the check to the university and it’s excluded. Write it to your grandchild who then pays the university and it’s a gift. The same rule covers health insurance premiums when paid straight to the insurer.
529 Plan Super-Funding
Connecticut follows the federal rule allowing five years of annual exclusion gifts to be front-loaded into a 529 education account. For 2026, that’s up to $95,000 per beneficiary in one year, or $190,000 with a spouse electing gift splitting, provided you make no other gifts to the same beneficiary during the five-year window.4Internal Revenue Service. Instructions for Form 709 You report the contribution as spread evenly over five years on both the federal and Connecticut returns. If you die before the five years are up, part of the contribution comes back into your estate.
Spousal Transfers
Gifts to a spouse who is a U.S. citizen are unlimited and fully exempt. Gifts to a non-citizen spouse get a separate annual exclusion instead. For 2026, the first $194,000 of present-interest gifts to a non-citizen spouse is excluded; anything above that is a taxable gift.5Department of Revenue Services. Form CT-706/709 Line Instructions
Charitable Gifts
Donations to IRS-recognized charities are fully deductible for gift tax and don’t count against the lifetime exemption. This mirrors the federal treatment.
Residents vs. Non-Residents
Where you live changes what Connecticut can tax. 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) anywhere in the world.6Connecticut State Department of Revenue Services. Estate and Gift Tax Information A Connecticut resident gifting stock in an out-of-state company still has to report it. But a Connecticut resident gifting real estate or tangible property located outside Connecticut is not subject to the state’s gift tax on that transfer.1Connecticut General Assembly. Chapter 228c – Gift Tax
Non-residents owe Connecticut gift tax only on real estate and tangible property located inside Connecticut. A New York resident gifting a Connecticut vacation home to a child owes Connecticut gift tax. Gifting a brokerage account triggers nothing here.
Filing Form CT-706/709
You have to file Form CT-706/709 for any year in which you make a taxable gift, even if no tax is due because your cumulative gifts still sit below the $15 million exemption.7Department of Revenue Services. Connecticut Estate and Gift Tax – General Instructions 2024 A taxable gift is any gift above the $19,000 annual exclusion that isn’t otherwise exempt. Gifts fully covered by the annual exclusion don’t require reporting.
The return is due April 15 of the year after the gift. For gifts made during 2025, that’s April 15, 2026.6Connecticut State Department of Revenue Services. Estate and Gift Tax Information The deadline moves to the next business day if April 15 lands on a weekend or holiday.
You can extend the filing deadline by submitting Form CT-706/709 EXT, but the extension only covers paperwork. It does not push back the payment deadline.7Department of Revenue Services. Connecticut Estate and Gift Tax – General Instructions 2024 If you expect to owe tax, pay the estimated amount by April 15 along with the extension. Connecticut takes electronic filing through its myconneCT portal, and paper filing by mail still works.
Penalties for Late Payment or Non-Filing
Missing the April 15 payment deadline triggers two charges. The late-payment penalty is 10% of the unpaid tax or $50, whichever is greater.6Connecticut State Department of Revenue Services. Estate and Gift Tax Information On top of that, interest accrues at 1% per month on the unpaid balance from the original due date until you pay it off.8Connecticut General Assembly Office of Legislative Research. Interest Rates on State and Local Tax Underpayments and Overpayments At 12% annualized, the interest piles up quickly on a large bill.
If the Department of Revenue Services concludes you intentionally failed to report gifts, penalties escalate. Deliberate concealment can lead to additional civil penalties and, in serious cases, criminal tax evasion charges. The state can also place liens on property, garnish wages, and seize assets to collect.
How Gifts Affect Your Estate Tax
Connecticut’s gift and estate taxes are unified, so every dollar of taxable gifts you make now reduces the exemption available to your estate later. When your Connecticut taxable estate is calculated, the state adds back all Connecticut taxable gifts made on or after January 1, 2005, that aren’t already in your federal gross estate.6Connecticut State Department of Revenue Services. Estate and Gift Tax Information Your estate gets a credit for any Connecticut gift tax you already paid, so the same dollars aren’t taxed twice.
One trap catches married couples. Federal law lets a surviving spouse inherit any unused portion of a deceased spouse’s exemption through portability. Connecticut has no equivalent. Each spouse must use their own $15 million on their own, and whatever’s left unused at death disappears. Couples with substantial assets have to split gifts and plan deliberately to use both exemptions, because the state won’t let one carry over.