Connecticut Estate Tax: Everything You Need to Know - SmartAsset

There is an estate tax in Connecticut. As of 2023, there is a flat estate tax rate of 12%. If you’re a resident of Connecticut and thinking about planning your estate, this guide will explain what you need to know about the estate tax to make sure your affairs are in order when you pass away. If the estate tax may apply to you, consider finding a financial advisor to guide you through the estate planning process. SmartAsset can help you find an advisor with our free financial advisor matching service.

Connecticut Estate Tax Exemption

Connecticut is one of 12 states, plus the District of Columbia, that imposes an estate tax. While the vast majority of families aren’t affected by the federal estate tax (because of how high the exemption is), Connecticut’s estate tax affects a greater proportion of estates. For estates of people who died in 2022, the tax won’t apply if the estate is less than $9.1 million. As of 2023, the Connecticut estate tax exemption will match the federal exemption of $12.92 million. The estate tax is due within six months of the estate owner’s death, though a six-month extension may be requested.

The estate tax rate used to be progressive and payable on the value of the entire taxable estate. The tax rate ranged from 11.6% to 12% for 2022. In 2023, there will be a flat rate of 12%.

Connecticut Estate Tax Rate

Connecticut’s estate tax used to be progressive, with a series of increasing rates applying as the value of the estate gets higher. You can find your taxable estate bracket in the chart below for 2022.

If, for instance, you have an estate worth $10 million and you died in 2022, your taxable estate after the exemption is $900,000. All of that falls in the first bracket, so your tax rate is 11.6%. That means your total estate tax burden is $104,400.

CONNECTICUT ESTATE TAX RATES 2022

Taxable Estate*	Marginal Rate
Up to $9.1 million	0%
$9.1 million to $10.1 million	11.6%
$10.1 million and above	12.6%

*The taxable estate is the total above the exemption of $9.1 million

Starting in 2023, the exemption for the estate tax will increase to $12.92 million and there will be a flat rate of 12% for the total estate above that exemption.

What Is the Estate Tax?

The estate tax is a tax applied to an estate after a person dies but before the person’s money gets passed on to heirs. It is sometimes called the “death tax.” Only estates that reach a certain threshold are subject to the estate tax.

The estate tax is not the same as the inheritance tax, which is levied after the estate is dispersed to a person’s beneficiaries. While the estate tax is taken out of the estate, the beneficiaries are responsible for paying the inheritance tax.

Connecticut Inheritance Tax

There is no inheritance tax in Connecticut. However, another state’s inheritance tax may apply to you if your grantor lived in a state that has an inheritance tax. In Kentucky, for instance, the inheritance tax applies to all in-state property, even if the inheritor lives in another state. If someone who lives out-of-state leaves you something, make sure to check the local laws in your grantor’s state to see if you owe inheritance tax.

Connecticut Gift Tax

Connecticut is the only state in the union that levies its own gift tax. The lifetime exemption is equal to the estate tax exemption. There is also a yearly exemption of $15,000 per person per year.

The federal gift tax also has an exemption, which is $16,000 in 2022 and $17,000 in 2023. The federal lifetime exemption is $12.92 million as of 2023.

Connecticut Estate Tax for Married Couples

Connecticut does not have portability for spouses. When the second spouse of a married couple dies, only one exemption applies.

Federal Estate Tax

There is a federal estate tax that may apply on top of the Connecticut estate tax, but it has a higher exemption level of $12.06 million in 2022. This exemption is portable between spouses. This means a couple can protect up to $25.84 million with proper legal steps.

The top tax rate for the federal estate tax is 40%. Using the same method described above, you can find your federal estate tax burden within the table below.

FEDERAL ESTATE TAX RATES

Taxable Estate*	Base Taxes Paid	Marginal Rate	Rate Threshold**
$1 – $10,000	$0	18%	$1
$10,000 – $20,000	$1,800	20%	$10,000
$20,000 – $40,000	$3,800	22%	$20,000
$40,000 – $60,000	$8,200	24%	$40,000
$60,000 – $80,000	$13,000	26%	$60,000
$80,000 – $100,000	$18,200	28%	$80,000
$100,000 – $150,000	$23,800	30%	$100,000
$150,000 – $250,000	$38,800	32%	$150,000
$250,000 – $500,000	$70,800	34%	$250,000
$500,000 – $750,000	$155,800	37%	$500,000
$750,000 – $1 million	$248,300	39%	$750,000
Over $1 million	$345,800	40%	$1 million

*The taxable estate is the total above the exemption of $12.92 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.

Overall Connecticut Tax Picture

Connecticut is not tax-friendly for retirees. In fact, it ranks among the least tax-friendly states in the country for those in their golden years. The state fully taxes withdrawals from retirement accounts, like IRA or 401(k) plans, as well as payments from private or public pension plans. It also taxes Social Security. However, seniors who have an adjusted gross income below $75,000 ($100,000 for joint filers) are exempt from Social Security taxes. Connecticut’s income tax rate ranges from 3.00% to 6.99%.

The average property tax rate in Connecticut is 1.96%, among the highest in the country. That said, seniors age 65 and over who own and occupy a Connecticut home are eligible for a property tax circuit breaker of up to $1,250 for married couples or $1,000 for individuals.

Sales tax is 6.35% throughout Connecticut. There are no local sales taxes.

Estate Planning Tips

Estate planning, in Connecticut or elsewhere, takes time and knowledge. If you need some help, you should consider finding a financial advisor to guide you through the process. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Estate planning is easier if you know what your portfolio and savings are going to look like in your later years. You can use our retirement calculator to see how much you are likely to have in retirement.
A common misconception about estate planning is that it’s only for older people or rich people. This couldn’t be further from the truth. A solid estate plan can help protect you financially if the unexpected were to occur.