Connecticut’s estate tax is an important source of revenue for the state, raising $223.8 million in Fiscal Year 2018. The gift and estate taxes are highly progressive, falling on fewer than one-half of one percent of Connecticut households.
The progressivity of the estate tax mitigates the overall regressive impact of Connecticut’s tax system and helps to address our state's wealth inequality. In Connecticut, the top one percent pay a smaller share of their income in state and local taxes than any other income group, and the top 20 percent pay a lower portion than the middle and second highest quintiles. Connecticut is the state with the third most extreme income inequality in the country.
Among the key facts discussed in this fact sheet:
- Without an estate tax, large amounts of wealth would be transferred tax free from generation to generation, perpetuating inequality in our state.
- Almost every Northeast state has an estate or inheritance tax. Only Connecticut has a cap.
- There are no credible data to show that the estate tax significantly affects outmigration.
- Fewer than one percent of estates in the U.S. that paid the estate tax in 2013 owned small businesses and family farms.