Connecticut Gift Tax Rules and Filing Requirements
Navigate Connecticut's unique gift tax system. Our guide clarifies the state-specific rules and procedures for reporting taxable gifts to ensure compliance.
The state of Connecticut imposes a gift tax on the transfer of property where the giver, or donor, receives nothing or less than the full value in return. This tax operates independently of the federal gift tax system, and individuals making substantial gifts may have obligations under both state and federal law. The tax is structured to apply to large transfers of wealth, so not every gift will trigger a tax liability or filing requirement. The system works in conjunction with the state’s estate tax, preventing individuals from avoiding estate taxes by giving away assets before death.
Who is Subject to the Tax
The requirement to file a Connecticut gift tax return hinges on residency status and the type of property transferred. A Connecticut resident is subject to the tax on all taxable gifts made during a calendar year, regardless of where the gifted property is located. This includes gifts of real estate, tangible personal property, and intangible property like stocks and bonds.
Non-residents of Connecticut have a more limited exposure to the tax. A non-resident is only required to file and potentially pay tax on gifts of real property and tangible personal property that are physically located within Connecticut. For example, a non-resident gifting a vacation home located in the state would be subject to the rules, but a gift of stock held in a brokerage account would not be, as stock is considered intangible property.
Calculating the Connecticut Gift Tax
The calculation of the Connecticut gift tax is a cumulative process that considers gifts made over a lifetime, beginning on January 1, 2005. The state provides a lifetime exemption, which is the total amount of taxable gifts a person can make before a tax is owed. For 2025, the Connecticut lifetime gift and estate tax exemption is $13.99 million per individual. This amount is unified with the state’s estate tax.
To determine if a tax is due for a given year, a donor first calculates the total value of taxable gifts made during that year. A taxable gift is the amount given to any single individual that exceeds the annual exclusion, which for 2025 is $19,000. For instance, if a donor gives $50,000 to a child, the taxable portion of that gift is $31,000. This annual exclusion can be applied to gifts made to any number of individuals.
The donor must add the current year’s total taxable gifts to the total of all taxable gifts made in prior years since 2005. If this cumulative total is less than the $13.99 million lifetime exemption, no gift tax is due for the current year. If the cumulative total exceeds the exemption, the tax is calculated on the amount that surpasses the exemption threshold. The tax is levied at a flat rate of 12% on this excess amount, but the total combined gift and estate tax is capped at $15 million.
Required Information for Filing
The form used for filing is Form CT-706/709, the Connecticut Estate and Gift Tax Return. This form is used for both estate and gift tax purposes, and filers must complete the sections relevant to lifetime gifts. The form can be downloaded from the Connecticut Department of Revenue Services (DRS) website.
To complete Form CT-706/709, a filer must provide the following information:
- The donor’s full name, address, and Social Security number.
- For each gift, the donee’s name, address, and relationship to the donor.
- A detailed description of each gift, along with the date the gift was transferred.
- The fair market value of each gift on the date it was given.
A component of the return is establishing the fair market value of each gift. For securities, the value is the average of the high and low selling prices on the date of the gift. For real estate or other unique tangible assets, a professional appraisal may be necessary to substantiate the value reported on the return.
Filing and Paying the Tax
The deadline for filing the return and paying any associated tax is April 15th of the year following the calendar year in which the gifts were made. For example, for gifts made during 2024, the filing deadline is April 15, 2025. A return must still be filed if taxable gifts were made, even if no tax is due because the gifts are covered by the lifetime exemption.
The completed paper return must be mailed to the Department of Revenue Services at the address in the form’s instructions. Filers should verify the address on the most current version of the instructions. If a tax liability exists, payment must be submitted with the return.
Payment can be made by check or money order, payable to the “Commissioner of Revenue Services.” The donor’s Social Security number and the relevant tax year should be written on the memo line of the payment. The DRS also offers electronic payment options through its online portals. Filers should retain a copy of the submitted form and proof of payment for their records.