Understanding estate taxes is essential for effective estate planning. Here, we provide you with up-to-date information regarding estate and gift taxes in 2024 and 2025 to help you make informed decisions:

Federal Gift Tax Exemption:

2024 Annual Exclusion for a present interest gift:  $18,000 per donee

2025 Annual Exclusion for a present interest gift:  $19,000 per donee

Federal Estate Tax:

Executor’s Responsibilities: If the gross estate of a decedent surpasses their available estate tax exemption, considering prior gifts, the executor or administrator must file a federal estate tax return.

Exemption Amount in 2025: In 2025, the IRS has announced that the federal estate tax exemption will be $13,990,000. This exemption is indexed for inflation and undergoes annual adjustments.

Exemption Amount in 2024: In 2024, the federal estate tax exemption is $13,610,000. This exemption is indexed for inflation and undergoes annual adjustments.

Portability Feature: The federal estate tax exemption allows for portability between spouses. This means that a surviving spouse can “port” some or all of their predeceased spouse’s unused estate tax exemption amount. With the 2024 exemption of $13,610,000, a married couple can potentially shield $27,220,000 from federal estate tax.  In 2025, with the exemption increasing to $13,990,000, this number will increase to $27,980,000.

Future Changes: It’s important to note that in 2026, the federal estate tax exemption is slated to revert to its 2017 level of $5.49 million, indexed for inflation which should translate to approximately $7,000,000.

Connecticut Gift and Estate Tax:

State Gift Tax Exemption:

2024 Annual Exclusion for a present interest gift:  $18,000 per donee

2025 Annual Exclusion for a present interest gift:  $19,000 per donee

Connecticut Estate Tax Exemption:

Since 2023, the Connecticut estate tax exemption has been aligned with the federal estate exemption and is the same – see above

Non-Portability in Connecticut: Unlike the federal estate tax exemption, however, the Connecticut estate tax exemption is not portable. It cannot be transferred from the estate of the predeceased spouse to the estate of the surviving spouse.

Historical Changes in Connecticut’s Estate Tax Exemption:

• Prior to 2018, Connecticut’s estate tax exemption stood at $2 million for nearly 15 years.
• In 2019, it increased to $3.6 million.
• In 2020, it rose to $5.1 million.
• In 2021, the exemption reached $7.1 million.
• In 2022, it expanded to $9.1 million.
• In 2023, it increased significantly to $12,920,000, commencing the alignment with the federal exemption.
• In 2024, it is $13,610.00.
• In 2025, it is $13,990.00. 

Future Changes: It’s important to note that in 2026, the Connecticut estate tax exemption, in sync with the federal estate tax exemption, will be reduced to approximately $7 million.

At Heritage Law, we are committed to keeping you informed about Connecticut estate tax changes. If you have questions or need guidance, please don’t hesitate to reach out to us.

Updated October, 2024