Colorado does not have a state estate tax

Colorado has no estate tax. When someone dies, their heirs do not owe Colorado state tax on the value of the estate, regardless of how large it is. This is true whether the person who died lived in Colorado, owned property there, or both.

The federal government does have an estate tax, but it applies only to estates worth more than a certain amount — $13.61 million per person in 2024, though this threshold changes yearly and is set to drop significantly in 2026. Most Colorado residents will not owe federal estate tax either.

Some states impose their own estate or inheritance taxes in addition to the federal tax. Colorado is not one of them. This means Colorado residents have a simpler tax picture at death than residents of states like Massachusetts, New York, or Oregon, which do tax estates.

Key Takeaways

  • Colorado imposes no state estate tax on any size estate, so heirs pay nothing to the state based on inheritance value.
  • The federal estate tax only affects estates larger than $13.61 million per person in 2024, and most Colorado families fall below that threshold.
  • Colorado also has no state inheritance tax, which is different from an estate tax but serves a similar purpose in other states.
  • If you own property in multiple states, you may owe estate tax to a state other than Colorado even if you live here.

How the federal estate tax works if your estate is large

The federal estate tax is a tax on the transfer of wealth at death. It applies to the total value of everything a person owned — real estate, investments, bank accounts, retirement accounts, life insurance, and personal property — minus debts and certain deductions.

In 2024, the first $13.61 million of an estate is exempt from federal tax. Anything above that amount is taxed at 40 percent. For a married couple, each spouse has their own exemption, so a couple can shield up to $27.22 million before federal tax applies. These numbers are adjusted each year for inflation.

However, the exemption is scheduled to drop to roughly $7 million per person (adjusted for inflation) starting January 1, 2026, unless Congress changes the law. This means more estates could owe federal tax after that date, even though Colorado itself still will not tax them.

What happens if you own property in another state

If you live in Colorado but own real estate or a business in a state that has an estate tax, that state may claim tax on the portion of your estate located there. States like New York, Massachusetts, and Oregon can tax property within their borders even if the owner lived elsewhere.

The amount owed depends on the state's own exemption threshold and tax rate. Some states have much lower exemptions than the federal level — Massachusetts exempts only $1 million per person, for example. You would owe tax to that state on the value above their threshold, even though Colorado imposes nothing.

This is one reason to review your property holdings across state lines if your estate is substantial. An estate planning attorney in Colorado can help you understand whether you have exposure in another state.

Colorado inheritance tax does not exist either

Inheritance tax and estate tax are different, though people often confuse them. An estate tax is paid by the estate itself before money goes to heirs. An inheritance tax is paid by the person who receives the money, based on what they inherit.

Colorado has neither. Some states — Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — impose inheritance taxes on beneficiaries. Colorado does not, so heirs receive their full inheritance without owing state tax on it.

Planning considerations for Colorado residents with large estates

Even though Colorado has no state estate tax, federal tax planning may still matter if your estate is close to the federal exemption threshold. Strategies like lifetime gifts, trusts, and charitable donations can reduce the taxable value of an estate.

The exemption drop in 2026 is significant enough that some people with estates between $7 million and $13.61 million are reviewing their plans now. An estate planning attorney can explain whether your situation warrants action before the exemption shrinks.

If you own property in multiple states, or if you have a complex family situation — second marriage, adult children from different relationships, a business — an attorney familiar with both Colorado law and the laws of any other state where you own property can help you structure things to minimize tax burden on your heirs.

Frequently Asked Questions

Do I owe Colorado tax if I inherit money from someone who died?

No. Colorado has no inheritance tax, so you owe nothing to the state based on what you inherit. You may owe federal income tax on certain types of inherited assets — like retirement accounts or investment income — but that is different from an inheritance tax on the inheritance itself.

What if I die with an estate worth $20 million?

Colorado still taxes nothing. Your estate would owe federal estate tax on the amount above $13.61 million (in 2024), which is roughly $2.56 million at the 40 percent federal rate. But Colorado imposes no additional state tax on top of that.

Does Colorado tax retirement accounts or life insurance at death?

Colorado does not tax them as part of an estate tax. However, retirement accounts and life insurance are included in the value of your estate for federal estate tax purposes if your total estate is large enough to owe federal tax. The beneficiary may owe federal income tax on distributions from retirement accounts, but that is income tax, not estate tax.

If I move to Colorado from a state with estate tax, am I still liable?

No. Once you establish Colorado residency, Colorado law applies. However, if you still own property in your former state, that state may tax the portion of your estate located there. Residency and property location are separate for estate tax purposes.

Should I still do estate planning if Colorado has no estate tax?

Yes. Estate planning covers much more than tax — it addresses who inherits what, who manages your affairs if you become incapacitated, guardianship of minor children, and how quickly your heirs receive money. Colorado has no estate tax, but these other issues matter regardless.