Twelve states and Washington, D.C. impose their own estate tax
Estate tax is a state-level tax, not a federal one (the federal estate tax is separate). Twelve states currently collect estate tax: Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. Washington, D.C. also has an estate tax. Every other state does not.
The tax applies to the total value of a person's property, investments, and assets when they die. Each state sets its own threshold — the dollar amount below which no tax is owed — and its own tax rate. A $5 million estate in one state might owe nothing, while the same estate in another state could owe tens of thousands of dollars.
State estate taxes are separate from federal estate tax and from inheritance tax (which a few states charge to the people who receive money, rather than to the estate itself). You may owe both state and federal tax, or state tax alone, depending on where you lived and how much you left behind.
Key Takeaways
- Only twelve states and Washington, D.C. charge estate tax; the other thirty-eight states do not.
- Each state that has estate tax sets its own threshold (the amount you can leave tax-free) and its own tax rate, ranging from roughly 3.6% to 16%.
- Estate tax thresholds vary widely: some states tax estates over $1 million, while others do not tax until $5.9 million or higher.
- State estate tax is separate from federal estate tax and from inheritance tax; you may owe one, both, or neither depending on your state and the size of your estate.
- The threshold amounts change periodically, so the rules that apply today may not apply in future years.
State-by-state thresholds and tax rates
The states with estate tax do not all tax at the same level. Connecticut, for example, taxes estates over $12.92 million (as of 2024), while Oregon taxes estates over $1 million. The tax rate also varies: some states charge as little as 3.6% on the highest bracket, while others charge 16% or more.
Thresholds are adjusted annually in most states to account for inflation, so the dollar amount that triggers tax changes from year to year. A state's threshold this year may be higher or lower than it was last year. This means an estate that owed tax last year might not owe it this year, or vice versa.
The twelve states with estate tax are not evenly distributed geographically. Most are in the Northeast or on the West Coast. The Midwest, South, and Southwest have almost no state estate tax — only Illinois and Minnesota in those regions impose it.
How state estate tax differs from federal estate tax
The federal government also taxes large estates, but the federal threshold is much higher than most state thresholds. In 2024, the federal threshold is $13.61 million per person. Most estates never reach that amount, so most people never owe federal estate tax. But they may still owe state estate tax if they lived in one of the twelve states that has it.
An estate can owe both state and federal tax. If an estate is worth $3 million and the person lived in Oregon, the estate owes Oregon state tax (because Oregon's threshold is $1 million) but not federal tax (because the federal threshold is $13.61 million). If the same estate was in a state with no estate tax, it would owe nothing to either the state or the federal government.
Federal thresholds are set by Congress and change periodically. State thresholds are set by state legislatures and also change, though usually annually and in smaller increments. Both can shift significantly after elections or legislative changes.
Inheritance tax is different from estate tax
Six states charge inheritance tax instead of (or in addition to) estate tax. Inheritance tax is paid by the people who receive money from the estate, not by the estate itself. The six states with inheritance tax are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Maryland is the only state that has both estate tax and inheritance tax. In Maryland, the estate pays estate tax on the total value, and then the people who inherit also pay inheritance tax on what they receive. In the other five states, only the inheritors pay tax, not the estate.
Inheritance tax rates and thresholds also vary by state. Some states exempt spouses and children from inheritance tax, while others tax all inheritors. The relationship between the person who died and the person who inherited often determines the tax rate.
What triggers state estate tax
State estate tax is triggered by the total value of everything a person owned at the time of death. This includes real estate, bank accounts, investments, retirement accounts, life insurance proceeds, vehicles, and personal property. The value is added up, and if it exceeds the state's threshold, the estate owes tax on the amount above that threshold.
Not all assets are taxed the same way. Some states allow deductions for debts the person owed, funeral expenses, and taxes already paid. Some states exempt certain types of property, such as property left to a spouse or to a charity. The rules vary by state.
The person who manages the estate (called the executor or personal representative) is responsible for calculating the tax owed and filing a return with the state. This usually happens within a set number of months after death, often nine to twelve months, though the deadline varies by state.
States with no estate tax
Thirty-eight states do not have estate tax. These states are: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming, and Wyoming.
Living in a state with no estate tax does not mean your estate will owe no tax overall. If your estate is large enough, you may still owe federal estate tax. And if you own property in multiple states, you may owe estate tax in the state where the property is located, even if you did not live there.
Planning considerations when state estate tax applies
People who live in states with estate tax sometimes use legal strategies to reduce what their estate will owe. These strategies might include giving money to family members during their lifetime (which may be taxed differently than money left in a will), setting up trusts, or moving to a state with no estate tax before death. The rules around these strategies are complex and vary by state and by individual circumstances.
An estate planning attorney or tax professional who works in your state can explain what strategies might apply to your situation. They can review your assets, your state's tax laws, and your goals, and recommend steps that might reduce the tax burden on your estate. This kind of planning is most useful for people whose estates are close to or above their state's threshold.
Frequently Asked Questions
Do I owe state estate tax if I move to a state with no estate tax before I die?
It depends on when you move and how long you live in the new state. Most states consider you a resident based on where you lived for the majority of the year before your death. If you move early enough and establish residency in the new state, you may avoid the tax. However, some states may still try to tax property you owned there, even if you moved away. An attorney in your new state can advise on residency requirements.
Can my spouse avoid state estate tax by inheriting everything?
In most states with estate tax, property left to a surviving spouse is exempt from estate tax. This is called the marital deduction. However, the tax is not eliminated — it is delayed. When the surviving spouse dies, their estate (which now includes what they inherited) may owe tax. Some couples use trusts or other strategies to reduce the total tax paid across both deaths, but this requires planning before the first death.
What is the difference between estate tax and inheritance tax?
Estate tax is paid by the estate itself, from the total value of everything the person owned. Inheritance tax is paid by the people who receive money, based on what they inherit and their relationship to the person who died. Six states have inheritance tax; twelve states and D.C. have estate tax; and Maryland has both.
Does my state's estate tax apply if I own property in another state?
Generally, your home state's estate tax applies to all your property, wherever it is located. However, some states also tax real estate located within their borders, even if you did not live there. If you own property in multiple states, you may owe estate tax in more than one state. A tax professional can review your specific situation.
When do estate tax thresholds change?
Most states adjust their thresholds annually, usually in January, to account for inflation. The exact adjustment varies by state and by how much inflation occurred. Federal thresholds change less frequently and are set by Congress. You should check your state's current threshold each year if you are tracking whether your estate might owe tax.