June 3, 2019
By: Carole M. Bass
The Connecticut exemption from estate and gift tax is now scheduled to match the federal exemption (currently $11,400,000 in 2019 and indexing annually for inflation) in 2023 and to drop back to the pre-Tax Cuts and Jobs Act federal exemption level ($5,000,000 indexed annually for inflation), in 2026 barring any changes in federal law. After two competing tax bills passed the Connecticut legislature in 2018, causing confusion in the amount of the Connecticut exemption from estate and gift over the next several years, we now have clarity.
The current 2019 Connecticut exemption is $3,600,000. That exemption will rise to $5,100,000 in 2020, to $7,100,000 in 2021 and to $9,100,000 in 2022 before matching the federal exemption on January 1, 2023.
Since Connecticut has the distinction of being the only state that imposes a state level gift tax, Connecticut residents wishing to take advantage of the increased federal exclusion by making current lifetime gifts might plan their gifts gradually over the next several years to avoid making taxable gifts exceeding the Connecticut exemption. In addition, Connecticut residents may, if applicable, wish to make gifts of out-of-state real or tangible property, which are not subject to Connecticut gift tax.
We invite readers who are Connecticut residents to contact us to discuss strategies for lifetime gifting in light of these recent changes.