Find Out If Your State Has an Inheritance or Estate Tax

Why It Matters:

  • When loved ones with a lot of assets die, their estates may be subject to the federal estate tax.
  • There may be state estate taxes and state inheritance taxes to pay too.
  • If you or your family members have substantial assets, you might want to ask a financial professional about strategies for minimizing what heirs will owe.

Transamerica tkc.profilePicture Written by: Transamerica
Feb. 28, 2018

2-3 Min readClock Icon

The last thing you probably want to think about when loved ones die are the taxes owed by their estate — or the taxes you and any other heirs might owe on what you inherit.

Generally speaking, the new tax bill signed into law by President Donald Trump makes estate taxes something only wealthier families have to worry about. But if your loved one had a farm plus a forgotten holding of bitcoin, for example, his or her estate could quickly pass the threshold.

Estate tax and inheritance tax

Estate taxes are based on the value of the deceased's property, only apply if the estate exceeds a certain threshold, and are paid before the money is distributed to heirs, says the life and legacy planning company Everplans.

Inheritance taxes are paid by the person receiving the property and vary depending on how the heir was related to the deceased (example: spouse, child, cousin, etc.).

Wealthy estates face a federal estate tax, but some states also levy an estate tax, inheritance tax, or both.

Taxfoundation.org has listed state death tax information for 2017.

We’ve put together a summary of which states have an estate or inheritance tax for those who pass away in 2018, according to public information, data compiled by Bloomberg BNA, and a state death tax chart compiled by The American College of Trust and Estate Counsel.

Note: The portion of an estate that’s subject to state taxes can vary depending on factors including the state where the assets are.

Both an estate tax and inheritance tax for those who pass away in 2018

  • Maryland: Up to 16% estate tax rate (exemption threshold: $4 million); 0-10% inheritance tax rate

States (and D.C.) with an estate tax for those who pass away in 2018

  • Connecticut: 7.2-12% estate tax rate (exemption threshold: $2.6 million).
  • Hawaii: 10-15.7% estate tax rate (exemption threshold: $10 million plus adjustments for inflation; The American College of Trust and Estate Counsel estimates that will be about $11.2 million*).
  • Illinois: 0.8-16% estate tax rate (exemption threshold: $4 million).
  • Maine: 8-12% estate tax rate (exemption threshold: $10 million plus adjustments for inflation, or an estimated $11.2 million*).
  • Maryland: (see above).
  • Massachusetts: 0.8-16% estate tax rate (exemption threshold: $1 million).
  • Minnesota: 13-16% estate tax rate (exemption threshold: $2.4 million).
  • New York: 3.06-16% estate tax rate (exemption threshold: $5.25 million).
  • Oregon: 10-16% estate tax rate (exemption threshold: $1 million).
  • Rhode Island: 0.8-16% estate tax rate (exemption threshold:a little over $1.537 million).
  • Vermont: 16% estate tax rate (exemption threshold: $2.75 million).
  • Washington: 10-20% estate tax rate (exemption threshold: $2.193 million).
  • Washington (District of Columbia): 8-16% estate tax rate (exemption threshold:estimated $11.2 million*).

*Assuming the exemption amount is not changed in reaction to: Pub. L. 115-97, the 2017 tax act (officially, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”).

States with an inheritance tax

  • Iowa: 0-15% inheritance tax rate.
  • Kentucky: 0-16% inheritance tax rate.
  • Maryland: (see above).
  • Nebraska: 1-18% inheritance tax rate.
  • New Jersey: 0%-16% inheritance tax rate.
  • Pennsylvania: 0-15% inheritance tax rate.

Things to Consider:

  • Take a quick look at whether your family might owe federal or state death taxes one day.
  • If you think your family might be on the hook, you can talk to a financial professional about steps to take today to minimize those taxes.
  • Taking care of a loved one’s estate is tough when all you want to do is grieve. We hope this checklist can help you get through some of those tasks a little more easily.

Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.

Check with an expert on estate and inheritance taxes for your state for details and more information.

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