New Year, New Connecticut Estate and Gift Tax Exemption

While aspects of Connecticut’s income tax have received attention recently, somewhat lost in the conversation is the increase in the Connecticut estate and gift tax exemptions in 2019 and the planned increase in those exemptions over the next several years. Legislation passed during the 2018 session of the Connecticut General Assembly increased the exemption for Connecticut estate taxes to $3.6 million for deaths occurring after January 1, 2019. In addition, the Connecticut gift tax exemption for gifts occurring after January 1, 2019 also stands at $3.6 million. As a reminder, the Connecticut gift tax applies to any gifts made by Connecticut residents and to gifts made by non-residents of real estate or tangible personal property located in Connecticut. The new $3.6 million exemption represents an increase of $1 million from the 2018 exemptions for those taxes. The maximum rate of tax remains at 12%. Note, unlike the federal exemption, the Connecticut exemption may not be transferred to a surviving spouse (so-called “portability”).

As part of the 2018 legislation, the Connecticut General Assembly also chose to schedule additional increases in Connecticut’s estate and gift tax exemptions over the next several years until Connecticut’s exemptions match the federal exemptions, which were recently doubled to $11 million per person by the federal Tax Cuts and Jobs Act of 2017. Yet to be seen is whether other states in the Northeast such as New York and Massachusetts will follow suit. The federal exemptions are scheduled to sunset after 2025 and reset to an exemption of $5 million adjusted for inflation. If the federal sunset occurs, the Connecticut exemptions similarly will be reduced.

Connecticut Estate and Gift Tax Exemptions

Year Exemption

2019 $3.6 million

2020 $5.1 million

2021 $7.1 million

2022 $9.1 million

2023 Equal to then in effect federal estate and gift tax exemptions

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