Estate and Inheritance Tax: State by State

Written on Wednesday February 6, 2019 by Bob Hinrichs

If you are the heir or beneficiary to an estate, it’s helpful to know the taxes that may be imposed on your inheritance – especially if you’re liable to pay them. There are a multitude of taxes that may apply depending on the type of assets; however, the specific ones we are discussing today are estate and inheritance tax. Currently, there is a federal estate tax that applies across all 50 states; however, there are some states that take it a step further and impose their own state-level estate, inheritance, or “death” tax as well.

With the passing of the new tax bill in December of 2017, federal estate taxes changed a bit for the years 2018-2025. Federal taxes will only be levied on estates that exceed $10 million in worth, which is easy enough to keep track of and won’t impact the majority of estates in America. But, let’s walk through the different state estate taxes specifically so you know what kind of taxes you might be facing depending on where your loved one lived.

The good news is that 33/50 states don’t impose any sort of estate or inheritance tax in addition to the federal tax. The remaining 17 states (and Washington D.C.) have policies (effective for 2018).

State by State Estate and Inheritance Tax Breakdown

  • Connecticut has estate taxes with an exemption of $2,600,000, maximum tax rate of 12% and an overall cap of $20,000,000.
  • D.C. & Hawaii’s estate tax has an exemption of $11,200,000 and a maximum tax rate of 16%.
  • Illinois uses estate taxes with an exemption of $4,000,000 and maximum tax rate of 16%.
  • Iowa & Pennsylvania have inheritance taxes with a maximum tax rate of 15% and they offer no exemptions.
  • Kentucky’s inheritance tax exemption is $500 and they have a maximum tax rate of 16%.
  • Maine has an estate tax exemption of $11,200,000 and a maximum tax rate of 12%.
  • Maryland has estate taxes with an exemption of $4,000,000 and a maximum tax rate of 16%. They also have an inheritance tax with no exemptions.
  • Massachusetts & Oregon’s estate tax has an exemption amount of $1,000,000 and a maximum tax rate of 16%.
  • Minnesota’s estate tax exemption amount is $2,400,000 and they have a maximum tax rate of 16%.
  • Nebraska has an inheritance tax exemption of $10,000 and a maximum tax rate of 18%.
  • New Jersey has inheritance taxes with a maximum tax rate of 16% and offers no exemptions.
  • New York’s estate tax exemption amount is $5,250,000 and their maximum tax rate is 16%.
  • Rhode Island’s estate tax exemption is $1,537,656 and has a maximum tax rate of 16%.
  • Vermont has estate taxes with an exemption of $2,000,000 and a maximum tax rate of 16%.
  • Washington’s estate tax has an exemption of $2,193,000 and a maximum tax rate of 20%.

Exact tax rates are usually determined by the total estate value. To clarify, there is a difference between inheritance tax and estate tax. Estate taxes are paid for by the deceased’s estate before the assets are distributed to the beneficiaries whereas inheritance taxes put the financial burden on the beneficiaries themselves.

We hope this guide was helpful for you to get a glimpse of what your state estate and inheritance taxes may look like in 2018, but remember this isn’t an all-inclusive guide. Look closer at your state’s policies (or consult an accountant) to better understand the specifics that may apply.

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   Inheritance

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