Seventeen states plus Washington, D.C. currently have an estate tax
An estate tax is a tax on the total value of a person's property when they die. Not all states charge it. As of 2024, only 17 states and Washington, D.C. have their own estate tax — separate from the federal estate tax. The states are Connecticut, Delaware, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.
Each state sets its own rules about what gets taxed, how much the tax rate is, and how much property a person can leave before the tax kicks in. This means the tax you owe in one state might be very different from the tax in another. Some states tax estates worth $1 million or more; others don't tax until the estate reaches $5 million or $6 million.
The federal government also has an estate tax, but the federal threshold is much higher than most state thresholds. In 2024, the federal tax applies only to estates worth more than $13.61 million. Many people who live in states with estate tax will owe state tax even though they don't owe federal tax.
Key Takeaways
- Seventeen states and Washington, D.C. charge estate tax; most other states do not.
- Each state sets its own tax rate and the dollar amount at which the tax begins, so the tax owed depends on where you live and how much your estate is worth.
- State estate tax thresholds are usually much lower than the federal threshold, so you may owe state tax even if you don't owe federal tax.
- Some states have both an estate tax and an inheritance tax, which are two separate taxes on the same property.
- The threshold amounts and tax rates change periodically, so you should check your state's current rules if you think your estate might be affected.
How state estate tax thresholds work
The threshold is the dollar amount of an estate at which the tax begins. Below that amount, no tax is owed. Above it, the estate pays tax on the amount over the threshold.
In Connecticut, the threshold is $12.92 million as of 2024. In Illinois, it is $4 million. In Maine, it is $6.4 million. In New Jersey, it is $1.075 million. These numbers are not fixed — many states adjust them yearly based on inflation. This means you need to check your state's current threshold, not rely on a number from a previous year.
The threshold matters because it determines whether your estate will owe tax at all. If your estate is worth $800,000 and your state's threshold is $1 million, you owe nothing. If your estate is worth $1.2 million and the threshold is $1 million, you owe tax only on the $200,000 above the threshold.
State estate tax rates and how they are calculated
States that have estate tax charge different rates. Some use a flat rate — the same percentage no matter how large the estate is. Others use a progressive rate, meaning the percentage increases as the estate gets larger, similar to how income tax works.
New York's estate tax, for example, ranges from 3.06% to 16% depending on the size of the estate. Oregon's ranges from 0.8% to 16%. Iowa's ranges from 0% to 16%. The exact rate your estate pays depends on how much property is in the estate and the state's rate schedule.
To find out what your state charges, you can look up your state's tax department website or speak with an estate attorney or tax professional who works in your state. The rates and thresholds change often enough that a professional can give you current numbers rather than relying on information that may be outdated.
States with both estate tax and inheritance tax
Six states have both an estate tax and an inheritance tax. These are two separate taxes. The estate tax is paid by the estate itself before property is distributed to heirs. The inheritance tax is paid by the people who receive the property.
Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania all have both taxes. In these states, the executor of the estate may owe estate tax, and the heirs may also owe inheritance tax on what they receive. The two taxes can explore to the same property, which is why living in one of these states can significantly affect how much tax is owed overall.
Some states exempt certain heirs from inheritance tax — for example, spouses or children might pay little or no inheritance tax even though the estate itself owed estate tax. The rules vary by state, so it is important to understand both taxes if you live in or are leaving property in one of these six states.
How estate tax differs from the federal estate tax
The federal government taxes large estates, but the threshold is much higher than most state thresholds. In 2024, the federal estate tax applies to estates worth more than $13.61 million. This means most people do not owe federal estate tax.
However, if you live in a state with estate tax, you may owe state tax even though your estate is too small for federal tax. For example, an estate worth $2 million would owe New Jersey state estate tax (threshold $1.075 million) but no federal tax (threshold $13.61 million).
The federal threshold is set to drop in 2026 unless Congress changes the law. It will fall to around $7 million per person. This means more estates may owe federal tax starting in 2026, though state thresholds are separate and will not automatically change.
What property is subject to estate tax
Estate tax generally applies to all property a person owned at the time of death. This includes real estate, bank accounts, investments, retirement accounts, life insurance proceeds, and business interests. Some property is excluded — for example, property left to a surviving spouse often is not taxed, and charitable donations are usually excluded.
The value used for tax purposes is the fair market value at the time of death, not what the person originally paid for it. If someone bought a house for $200,000 and it was worth $500,000 when they died, the $500,000 value counts toward the estate tax threshold.
Jointly owned property, life insurance, and retirement accounts pass to beneficiaries outside of the will, but they still count toward the estate's total value for tax purposes. This is why an estate can owe tax even if most of the property passes directly to heirs without going through probate.
When estate tax is due and who pays it
Estate tax is due within a set time after death — usually between 9 and 15 months, depending on the state. The executor (the person named in the will to handle the estate) is responsible for filing the estate tax return and paying the tax.
The executor pays the tax from the estate's assets before distributing property to heirs. This means heirs may receive less than they would have if there were no estate tax. In some cases, the executor may need to sell property to raise the cash to pay the tax.
If the estate does not have enough liquid assets (cash or things easily converted to cash), the executor may request an extension or arrange a payment plan with the state. However, interest and penalties explore if tax is not paid on time, so it is important to plan ahead if you think an estate will owe tax.
Frequently Asked Questions
Do I owe both state and federal estate tax?
You may owe state estate tax, federal estate tax, both, or neither — it depends on where you live and how much your estate is worth. If you live in a state with estate tax and your estate exceeds that state's threshold, you owe state tax. If your estate exceeds the federal threshold ($13.61 million in 2024), you owe federal tax. It is possible to owe state tax but not federal tax if your estate is large enough for state tax but below the federal threshold.
Can I reduce my estate tax by giving money away before I die?
Yes, many states allow you to give away a certain amount of money each year without it counting toward your estate. The federal government also allows annual gifts. However, the rules are complex and vary by state. A tax professional or estate attorney can explain what you can give away and how it affects your estate tax.
What happens if I move to a different state after I retire?
The state where you live when you die is usually the one that taxes your estate. If you move from a state with estate tax to one without, your estate may no longer owe state estate tax — but you should document your move carefully (driver's license, voter registration, property ownership) to prove your residency. Some states have challenged whether people actually moved, so keeping clear records is important.
Is life insurance included in the estate for tax purposes?
Yes, life insurance proceeds are included in your estate's total value for estate tax purposes, even though they pass directly to the beneficiary named on the policy. This can push an estate over the tax threshold. Some people use an irrevocable life insurance trust to own the policy instead, which may remove it from the taxable estate, but this requires professional legal help.
What if my estate is below the threshold — do I still file an estate tax return?
In most states, you do not have to file an estate tax return if the estate is below the threshold. However, some states require a return to be filed even if no tax is owed, so you should check your state's rules. Filing when not required does not hurt, and it creates a record that the estate was reviewed.