UPDATE ON THE CONNECTICUT ESTATE TAX EXEMPTION
In a previous blog, New State Budget Increases the Connecticut Estate Tax Exemption, I reported on a change to the Connecticut estate and gift tax exemptions brought about by the budget signed by Governor Malloy on October 31, 2017. However, these exemption figures were short lived, and have once again changed.
Under the 2017 law, the Connecticut estate and gift tax exemption was scheduled to increase to match the federal estate and gift tax exemption beginning in the year 2020 and beyond. However, this change was based upon a Federal Exemption amount, at the time, of only $5.49 million.
A few months later, in December of 2017, the federal government passed the Tax Cuts and Jobs Act (TCJA), which more than doubled the federal exemption to $11.18 million for 2018. Connecticut had not anticipated the budget impact of creating this large of a state exemption. In response, Connecticut again revised its estate tax exemption on May 31, 2018.
Under current law, the Connecticut estate and gift tax exemptions are scheduled to change as follows:
$3.6 million in 2019
$5.1 million in 2020
$7.1 million in 2021
$9.1 million in 2022
Equal to the federal exemption amount in 2023 and beyond.
The federal estate and gift tax exemption is indexed for inflation. The federal exemption for 2019 is currently $11.4 million. However, the increased federal exemption under TCJA is set to expire after 2025 and revert back to the 2017 exemption amount of $5.49 million (indexed for inflation), unless congress acts to extend the law. If you have questions about the impact the Connecticut and federal estate and gift tax exemptions may have on your family, call the attorneys at Cipparone & Zaccaro, P.C., to discuss strategies for avoiding estate and gift tax.
By Jack Reardon, J.D., LL.M., C.E.L.A.
