Federal Estate Tax Exemption Reaches a New Permanent High: What It Means for Your Connecticut Estate Plan

For years, Connecticut families with substantial assets planned around a looming deadline. The federal estate tax exemption, doubled by the 2017 Tax Cuts and Jobs Act, was scheduled to fall back to roughly half its size at the end of 2025. Many estate plans were drafted specifically with that shrinking exemption in mind. That deadline has now come and gone, and the outcome was different than expected. Recent federal legislation permanently raised the exemption instead of letting it drop. If your estate plan was built around the old assumptions, it may be time for a review. Our Connecticut estate planning attorney can explain in more detail.

What Changed at the Federal Level

New federal legislation set the federal estate and gift tax exemption at fifteen million dollars per individual for 2026, or up to thirty million dollars for a married couple who takes the proper legal steps to use portability. This is an increase from the 2025 exemption amount, and unlike the temporary increase under the 2017 law, this change has no scheduled expiration date. The exemption will also be adjusted for inflation in future years. Estates that exceed the exemption amount remain subject to a top federal tax rate of forty percent on the excess.

This shift means that far fewer Connecticut families will face federal estate tax exposure than previously projected. Yet for those with significant assets, including business owners, real estate holders, and families who have accumulated wealth over decades, careful planning remains essential to ensure that any past planning still reflects current law.

Connecticut Has Its Own Estate Tax Rules

Connecticut is one of a small number of states that imposes its own separate estate tax in addition to the federal tax. As of 2026, Connecticut has aligned its state exemption to match the new federal amount of fifteen million dollars per person. Estates valued above that threshold are taxed at a flat rate of twelve percent on the amount exceeding the exemption.

There are two important distinctions to keep in mind. First, Connecticut does not currently allow portability between spouses at the state level, meaning that if one spouse does not use their full exemption, it cannot automatically be transferred to the surviving spouse. Second, Connecticut remains the only state in the country that also imposes its own gift tax, which can affect lifetime giving strategies for those looking to reduce the size of their taxable estate.

Why Older Estate Plans May Need a Second Look

Estate plans drafted several years ago, particularly those built around the assumption that the exemption would shrink dramatically, may contain outdated tax planning provisions that are no longer necessary or that no longer reflect your goals. Trust structures designed specifically to shelter assets from an anticipated lower exemption may now be more complex than your circumstances require. On the other hand, families whose net worth has grown, or who own property in multiple states, should not assume that a higher exemption means estate planning is no longer necessary. Guardianship designations, powers of attorney, and health care directives remain just as important regardless of exemption levels, and Connecticut’s lack of spousal portability at the state level still requires deliberate planning for married couples.

Contact a Canton Estate Planning Attorney to Review Your Plan

Significant changes to the federal estate tax exemption, combined with Connecticut’s own distinct estate and gift tax rules, make this a reasonable time for many families to revisit documents that may have been drafted years ago under very different assumptions. Whether you are updating an existing plan or creating one for the first time, working with an experienced Canton estate planning attorney can help ensure that your plan reflects both current law and your family’s actual goals. The Law Office of Brian S. Karpe welcomes the opportunity to review your estate plan and discuss whether updates are appropriate given these changes. Reach out to our firm to schedule a consultation.

Source:

portal.ct.gov/drs/individuals/individual-income-tax-portal/estate-and-gift-taxes/tax-information