Does Your State Have an Estate or Inheritance Tax?

May 25, 2016

In addition to the federal estate tax of 40 percent (which is Facts & Figures.

Currently, fourteen states and the District of Columbia impose an estate tax while six states have an inheritance tax. Maryland and New Jersey have both.

The state with the highest maximum estate tax rate is Washington (20 percent), followed by ten states and the District of Columbia with a top rate of 16 percent. Delaware and Hawaii have the highest exemption thresholds, which at $5,450,000 match the federal exemption. At $675,000, New Jersey’s exemption is the lowest.

Of the six states with inheritance taxes, Kentucky and New Jersey have the highest top rates at 16 percent. Maryland offers the lowest top rate, at 10 percent. All six states exempt spouses, and some go farther to exempt immediate relatives or lineal heirs.

Tennessee repealed its estate tax (confusingly called an inheritance tax by the state) this year, the culmination of a multi-year phase-out, and Indiana completed the repeal of its inheritance tax in 2013. New York are in the process of phasing in new, higher estate tax exemptions, eventually matching the federal exemption level ($5.9 million) by 2019. District of Columbia is slated to phase in higher exemptions to the estate tax as new revenues become available.

Estate and inheritance taxes have large compliance costs, tend to suppress entrepreneurship, and are among the most harmful taxes to here for more information on estate and inheritance taxes.

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