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Some states impose an inheritance or estate tax that applies after a death. Here's what you need to know about how these taxes work and who must pay them.
Eleven states have only an estate tax: Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington. The District of Columbia does, as well. Estate taxes are levied on the value of a decedent’s assets after debts have been paid.
There's a federal estate tax, although it only applies to estates worth more than $13.61 million. Several states have their own estate taxes with lower thresholds, while six have inheritance...
There is no federal inheritance tax and only six states have a state-level tax: Iowa, Kentucky, Maryland, New Jersey, and Pennsylvania. Below are the ranges of inheritance tax rates for each state in 2023. Note that historical rates and tax laws may differ.
States began to impose an inheritance tax starting with New York in 1885. By 1916, 43 states had an inheritance tax. Only six states — Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — have an inheritance tax in 2024, and Iowa’s is ending on January 1, 2025.
Which states have an inheritance tax? Explore 2021 state estate tax rates and 2021 state inheritance tax rates. In addition to the federal estate tax, with a top rate of 40 percent, some states levy an additional estate or inheritance tax.
Of the six states with inheritance taxes, Nebraska has the highest top rate at 18 percent. Maryland—which also has an estate tax—imposes the lowest top rate at 10 percent. All six states exempt spouses, and some fully or partially exempt immediate relatives. Compare state estate tax rates and state inheritance tax rates below.
Two states, Connecticut and Vermont, have flat estate taxes with a single tax rate. Hawaii and Washington have the highest top rates in the nation at 20 percent. Eight states and the District of Columbia are next with a top rate of 16 percent.
Inheritance tax is a state tax only; the federal government does not have an inheritance tax, though it has a federal estate tax. Some states also impose a state estate tax. Maryland is the only remaining state that has both a state estate tax and a state inheritance tax.
Twelve states and the District of Columbia have estate taxes and six states have inheritance taxes. Maryland is the only state that has an estate tax and an inheritance tax.