In addition to the Federal Estate Tax which has a significant exemption threshold, some states have an inheritance tax and some have an estate tax. See below for details per state.
If a person who dies leaves behind an estate that exceeds $12.06 million in 2022 ($24.12 million for married couples), the Executor/Trustee must file a federal estate tax return within 9 months and pay 40 percent of any assets over that threshold. For example: If an estate is worth $15 million, $2.94 million is taxed at 40 percent.
This exemption will drop to $6 million on Jan 1, 2026.
Estate taxes are based on the value of the deceased's assets, only apply if the estate exceeds the exemption, and are paid before the money is distributed to heirs.
Inheritance taxes are paid by the person receiving the asset and can vary depending on how the heir was related to the deceased.
NOTE: tax law changes constantly, below is for reference only, contact your local tax authority for the latest information.
States that have no inheritance tax or estate tax:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming
States that have taxes related to your estate plan:
Connecticut: Estate tax rate of 11.6 percent to 12 percent (exemption threshold: $9.1 million in 2022, and is scheduled to match the federal amount in 2023.)
Hawaii: Estate tax of 10 percent to 20 percent (exemption threshold of $5.49 million)
Illinois: Estate tax of 0.8 percent to 16 percent (exemption threshold of $4 million)
Iowa: Top inheritance tax rate is 9 percent (no exemption threshold)
Kentucky: Top inheritance tax rate is 16 percent (exemption threshold for Class C beneficiaries: $500; exemption threshold for Class B beneficiaries: $1,000; Class A beneficiaries, which is the majority, pay no inheritance tax)
Maine: Estate tax of 8 percent to 12 percent (exemption threshold of $5.6 million)
Maryland: Estate tax of 0.8 percent to 16 percent (exemption threshold of $5 million) AND The top inheritance tax rate is 10 percent (no exemption threshold)
Massachusetts: Estate 0.8 percent to 16 percent (exemption threshold: $1 million)
Minnesota: Estate tax rate 13 percent to 16 percent (exemption threshold: $3 million)
Nebraska: Top inheritance tax rate is 18 percent (exemption threshold of $10,000)
New Jersey: Top inheritance tax rate is 16 percent (no exemption threshold)
New York: Estate tax rate from 3.06 percent to 16 percent (exemption threshold of $6.10 million)
Oregon: Estate tax rate is 10 percent to 16 percent (exemption threshold of $1 million)
Pennsylvania: Top inheritance tax rate is 15 percent (no exemption threshold)
Rhode Island: Estate tax rate is 0.8 percent to 16 percent (exemption threshold of $1.7 million)
Vermont: Top estate tax rate is 16 percent (exemption threshold of $5 million)
Washington: Estate tax rate is 10 percent to 20 percent (exemption threshold of $2.2 million)
Washington DC (District of Columbia): Estate tax rate 11.2 percent to 16 percent (exemption threshold of $4.3 million)