Connecticut does not have an inheritance tax. No one who inherits money or property from a Connecticut resident owes a state tax on what they receive. Connecticut does, however, tax the estate itself before assets are distributed, and it is the only state in the country that also taxes large lifetime gifts. Both apply only to estates and gifts above $15 million in 2026.
Connecticut Has No Inheritance Tax
An inheritance tax is paid by the person who receives assets, and rates usually depend on how closely the recipient was related to the deceased. Connecticut used to collect a version of this called the “succession tax,” but the legislature fully repealed it for anyone who died on or after January 1, 2005.1Justia. Connecticut General Statutes 12-340 – Tax on Transfers of Property, Sunset of Chapter Before then, beneficiaries owed tax based on the value of what they personally inherited.2CT.gov. TSSN-32, Connecticut Inheritance Tax
With that tax gone, anyone who inherits cash, real estate, retirement account proceeds, or other property from a Connecticut resident pays nothing to the state on the inheritance itself. Only five states still collect an inheritance tax at all: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, with rates that reach 16 percent depending on the beneficiary’s relationship to the deceased. Connecticut has moved entirely to taxing the estate before assets go out.
What Connecticut Taxes Instead: The Estate Tax
Rather than taxing beneficiaries, Connecticut taxes the total value of a deceased person’s estate above a set exemption. Since 2023, the state exemption has been tied to the federal estate tax exemption, which for 2026 is $15 million.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Estates valued at or below $15 million owe no Connecticut estate tax.4Connecticut State Department of Revenue Services. Estate and Gift Tax Information
Above the exemption, Connecticut applies a flat 12 percent tax on the excess amount.5Connecticut General Assembly Office of Legislative Research. Estate, Inheritance, and Gift Taxes in CT and Other States Take a Connecticut resident who dies in 2026 with an estate worth $17 million. The tax applies only to the $2 million above the exemption, producing a state estate tax of $240,000. The executor pays that out of the estate’s assets before distributing anything to the heirs.
The flat 12 percent replaced a graduated bracket system that ran roughly 10 to 12 percent under the previous rules. Estates large enough to owe Connecticut estate tax will also owe federal estate tax, since both use the same $15 million threshold in 2026. The federal rate is significantly steeper and reaches 40 percent on the highest-value estates.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Connecticut’s Gift Tax
Connecticut is the only state that taxes lifetime gifts.5Connecticut General Assembly Office of Legislative Research. Estate, Inheritance, and Gift Taxes in CT and Other States The purpose is straightforward: to keep people from giving assets away before death to sidestep the estate tax.
The gift tax and the estate tax share one unified exemption. Every taxable gift made during a person’s lifetime reduces what remains available to shelter their estate at death. If you give $3 million in taxable gifts over your lifetime, only $12 million of the 2026 exemption is left to shield your estate.4Connecticut State Department of Revenue Services. Estate and Gift Tax Information
Not every gift counts. For 2026, the annual federal gift tax exclusion is $19,000 per recipient.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 You can give up to that amount to as many people as you want each year without triggering the gift tax or eating into your lifetime exemption. Married couples can each use the exclusion separately, so together they can give up to $38,000 per recipient each year.
When a gift exceeds the annual exclusion, you must file a Connecticut gift tax return on Form CT-706/709 for that calendar year, even if your total lifetime gifts remain well below the exemption and no tax is due. The gift tax rate matches the estate tax rate: a flat 12 percent on any amount above the lifetime exemption.4Connecticut State Department of Revenue Services. Estate and Gift Tax Information
The State Exemption Is Not Portable Between Spouses
Federal law lets a surviving spouse claim the deceased spouse’s unused estate tax exemption through what is called a portability election. For 2026 that can bring a married couple’s combined federal exemption up to $30 million. The executor makes the election by filing a federal estate tax return (Form 706) by the deadline, even when no federal tax is owed.6Internal Revenue Service. Instructions for Form 706
Connecticut does not offer portability at the state level. Each spouse gets only their own $15 million exemption, and there is no way to shift an unused portion to the survivor. Couples whose combined assets could exceed a single exemption often need trust planning to make sure both exemptions actually get used.
Filing Requirements and Deadlines
Which form the executor files depends on the size of the estate. Estates at or below the exemption file the shorter Form CT-706 NT with the local probate court. Estates that go over the exemption file the full Form CT-706/709 with the Connecticut Department of Revenue Services and send a copy to the probate court.7Connecticut Department of Revenue Services. Form CT-706/709 Connecticut Estate and Gift Tax Return Line Instructions
The return and any tax owed are due within nine months of the date of death. An executor who needs more time can use Form CT-706/709 EXT to request an extension of time to file, an extension of time to pay, or both. An extension of time to pay does not extend the deadline for the gift tax portion of the return.7Connecticut Department of Revenue Services. Form CT-706/709 Connecticut Estate and Gift Tax Return Line Instructions Payments can go through the DRS online portal or by check with the correct voucher.
Penalties for Missing the Deadline
Late filing and late payment carry penalties at both levels. On the federal side, the failure-to-file penalty is 5 percent of the unpaid tax for each month or partial month the return is late, capped at 25 percent. A separate failure-to-pay penalty of 0.5 percent per month applies to any unpaid balance, with its own 25 percent cap.8Taxpayer Advocate Service. Failure to File Penalty Under IRC 6651(a)(1) Interest accrues on the unpaid balance as well.
When both penalties apply to the same month, the failure-to-file penalty is reduced by the failure-to-pay amount, so the combined maximum runs to 25 percent of the tax owed, plus interest. Connecticut assesses its own interest and penalties on late state returns. Filing for an extension before the deadline, even without paying in full, avoids the steeper failure-to-file penalty and limits interest exposure.