Estate and Inheritance Taxes by State, 2025

Estate and inheritance taxes are highly burdensome. They disincentivize in-state investment and can drive high-net-worth individuals out of state. They also yield estate planning and tax avoidance strategies that are inefficient, not only for affected taxpayers but also for the economy at large. The handful of states that still impose them should consider gradually eliminating them or at least conforming to federal exemption levels.

Under the Tax Cuts and Jobs Act (TCJA) of 2017, the federal estate tax exemption was temporarily raised from $5.49 million to $11.18 million per person, with annual inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spendin adjustments. (In tax year 2025, the federal exemption is $13.99 million.) This policy change was set to expire after 2025, which would have caused the exemption’s value to fall by about half, but the One Big Beautiful Bill Act (OBBBA) increased the threshold to $15 million starting in 2026, with that threshold indexed for inflation.

As of tax year 2025, Connecticut is the only state that conforms its estate tax exemption to the federal threshold. New York has the second highest exemption, excluding $7.16 million from its especially high-rate estate tax. At the other end of the spectrum, Oregon and Rhode Island have the least generous exemptions, at only $1 million and $1,802,431, respectively.

Because these taxes encourage wealthy individuals to move out of state—depriving the state of tax revenue that would have been generated during their lifetimes—many states eliminated their estate taxes following federal law changes in the 2000s, and some are engaging in current legislative discussions about reforms to their estate and/or inheritance taxes. During their 2025 legislative sessions, policymakers in Nebraska and Oregon considered structurally sound changes to their inheritance and estate taxes, respectively, but no such reforms were ultimately adopted. In Maryland, Gov. Wes Moore (D) proposed eliminating the inheritance tax and offsetting the revenue loss by lowering the estate tax exemption from $5 million to $2 million, but this proposal was not adopted.

Prior to 2005, the federal government incentivized states to assess state-level estate taxes by offering a federal credit against state estate taxes. This made estate taxes an attractive option for states since taxpayers paid the same amount in estate taxes whether their state levied the tax or not. After the federal government fully phased out the state estate tax credit in 2005, some states stopped collecting estate taxes by default, as their provisions were directly linked with the federal credit, while others responded by repealing their tax legislatively.

2025 Notable Changes

• Iowa eliminated its inheritance tax effective January 1, 2025.
• Washington increased its estate tax by raising all but its lowest marginal estate tax rate, including raising the top rate from 20 to 35 percent, while also increasing the estate tax exemption by $807,000, from $2.193 million in 2024 to $3 million in 2025. These changes took effect on July 1, 2025, and are the result of SB 5813, enacted in May 2025.
• Connecticut’s exemption, which is tied to the federal exemption, was adjusted for inflation, bringing it from $13.61 million in 2024 to $13.99 million in 2025.
• Maine’s exemption, which is indexed for inflation, increased by $200,000, from $6.8 million in 2024 to $7 million in 2025.
• New York’s exemption increased by $220,000, from $6.94 million in 2024 to $7.16 million in 2025, due to inflation.
• The District of Columbia’s inflation indexed exemption increased by $157,600, from $4,715,600 in 2024 to $4,873,200 in 2025.

Particularly after 2005, most states have been moving away from estate or inheritance taxes or have raised their exemption levels, as these taxes hurt states’ competitiveness and create incentives for costly and economically inefficient tax avoidance. Delaware repealed its estate tax at the beginning of 2018. New Jersey finished phasing out its estate tax at the same time and now only imposes an inheritance tax. Vermont finished phasing in an estate tax exemption increase in 2021, bringing the exemption to $5 million that year, compared to $2.75 million in 2019. Connecticut phased in an increase to its exemption over six years, matching the federal estate tax exemption in 2023 and simultaneously transitioning to a flat taxAn income tax is referred to as a “flat tax” when all taxable income is subject to the same tax rate, regardless of income level or assets. rate. In three other states—Nebraska, Oregon, and Maryland—efforts to reform their estate and/or inheritance taxes fell short in 2025.

States that levy estate and/or inheritance taxes impose punitive tax burdens on generational transfers of wealth, which can hurt family farms and businesses. Many business owners are “asset rich but cash poor,” so when estate and inheritance taxes are levied on the value of illiquid assets, like real estate or the value of the business, recipients may be forced to sell some of their inherited assets to pay the tax bill. The financial and administrative burdens associated with these taxes hamper economic growth and entrepreneurial activity, and taxpayers’ efforts to avoid or minimize tax burdens lead to deadweight loss and economic distortions.

In the 16 states and the District of Columbia where estate and/or inheritance taxes are levied, policymakers should consider ways to phase out or eliminate these taxes to promote the stability of family businesses, minimize economic distortions, and prevent government overreach during an already difficult time for the friends and family of the deceased.