Estate planning in Connecticut requires you to keep an eye on both state and federal tax rules. One of the most important numbers is the estate tax exclusion, which is the amount you can pass to heirs without triggering the imposition of the estate tax.
For 2026, both the Connecticut estate tax exclusion and the federal level have changed. Understanding these thresholds helps you protect your family and preserve your wealth.
2026 Connecticut Estate Tax Exclusion
Connecticut imposes its own estate tax, separate from the federal estate tax. For estates of decedents dying in 2025, the Connecticut exemption was $13.99 million.
Beginning in 2026, Connecticut aligns with recent federal legislation that permanently increases the exemption to $15 million per person, indexed annually for inflation.
This means:
- If your estate is valued below $15 million, no Connecticut estate tax is due.
- Estates above that threshold pay tax only on the excess amount.
The Federal Estate Tax Exclusion in 2026
The federal estate tax exclusion also rises to $15 million per individual in 2026.
Key points:
- The federal estate tax rate remains up to 40 percent.
- Only the portion of your estate above $15 million is taxed.
- Married couples can shield up to $30 million because a surviving spouse can use a deceased spouse’s exemption.
Why These Numbers Matter for You
Even if your estate falls below the $15 million threshold, planning is still essential. Connecticut’s estate tax applies only to larger estates, but federal and state rules interact. Without proper planning, you could face unnecessary taxes, delays, or disputes.
Proactive Planning
To make the most of the Connecticut estate tax exclusion:
- Calculate your estate value: Include real estate, investments, retirement accounts, business interests, and digital assets.
- Coordinate state and federal planning: Ensure your estate plan accounts for both exemptions.
- Use trusts strategically: Irrevocable trusts can reduce taxable estate size.
- Consider lifetime gifting: Connecticut also imposes a gift tax, but gifts within the exemption can reduce your taxable estate.
- Review beneficiary designations: Retirement accounts and life insurance policies should align with your estate plan.
- Plan for liquidity: Large estates may need cash to pay taxes; life insurance or business succession planning can help.
Common Pitfalls to Avoid
- Assuming exemptions stay fixed: Tax laws change; review your plan regularly.
- Failing to update documents: Marriage, divorce, or new children require revisions.
- Ignoring digital assets: Cryptocurrency and NFTs must be documented for heirs.
- Overlooking multi‑state property: Real estate outside Connecticut may trigger probate or taxes elsewhere.
Practical Next Steps
To protect your estate in 2026:
- Meet with a Connecticut estate planning attorney to review your estate value.
- Confirm how the $15 million exclusion applies to your situation.
- Explore trusts, gifting strategies, and charitable planning.
- Update your documents to reflect current law.
- Schedule regular reviews to adapt to future changes.
By understanding the Connecticut estate tax exclusion for 2026, you give your family clarity and security. With exemptions at $15 million per person, you have more room to plan strategically.
Taking action now ensures your estate passes smoothly, with minimal tax burden and maximum benefit to your loved ones.
Connecticut Estate Tax FAQs
Does the Connecticut estate tax apply if I move out of state before death?
Connecticut estate tax generally applies based on your domicile at death, not where individual assets are located. If you relocate and establish legal domicile in another state, Connecticut may lose the right to tax your estate.
That being stated, Connecticut real estate may still be subject to state-level considerations. Domicile is a fact-intensive determination, so timing and documentation matter.
How is my estate valued for Connecticut estate tax purposes?
Your estate is valued as of the date of death using fair market value, not what you originally paid for assets. This includes appreciation in real estate, closely held businesses, investment accounts, and certain lifetime transfers that remain taxable.
Professional appraisals often become necessary for high-value or illiquid assets.
Does Connecticut offer portability like the federal estate tax?
Yes. Connecticut allows a surviving spouse to use a deceased spouse’s unused estate tax exemption, similar to federal portability.
However, portability is not automatic. The executor must file a timely Connecticut estate tax return to preserve the unused exemption, even if no tax is owed at the first death.
Can lifetime gifts still trigger Connecticut tax issues?
They can. Connecticut is actually the only state with a state-level gift tax, which means certain lifetime transfers are tracked alongside estate tax calculations.
While gifting can reduce your taxable estate, poorly timed or improperly structured gifts may create unexpected reporting or tax consequences.
How are trusts treated for Connecticut estate tax purposes?
Trusts are evaluated based on control, timing, and retained interests, not merely on their existence.
Assets transferred to irrevocable trusts may fall outside your taxable estate, but only if the trust is drafted and funded correctly. Retaining certain powers or benefits can pull trust assets back into the taxable estate.
What happens if my estate crosses the exclusion by a small amount?
Connecticut does not tax your entire estate once you exceed the exclusion. Instead, only the portion above the exemption is subject to estate tax.
At the same time, even modest overages can create filing obligations, valuation scrutiny, and liquidity challenges that planning can address in advance.
Do retirement accounts count toward the Connecticut estate tax?
Yes. Retirement accounts such as IRAs and 401(k)s are included in your taxable estate for Connecticut estate tax purposes, even though beneficiaries will also face income tax when distributions occur.
Coordinating estate tax planning with retirement distribution planning is often critical for larger estates.
How often should I revisit my estate tax plan?
A review every few years is prudent, but certain events should trigger an immediate update. These include major asset growth, business sales, inheritance receipts, changes in marital status, or significant legislative updates.
Estate tax exposure often grows quietly, making periodic review essential.
We Are Here to Help!
Even if taxes are not going to be a concern, our firm can help you create a plan that ensures the fruition of your legacy goals.
We have a Westport, CT estate planning office and another location in Glastonbury, and you can send us a message or call us at 860-548-1000 to schedule a consultation at either location. And if you would like to join us at a complimentary seminar, head over to our seminar page to get all the details.
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