Summary
In the United States, only a few estates face federal estate taxes due to high exemption limits, but the situation varies at the state level. Some states have their own estate taxes with differing rules, while a few also impose inheritance taxes. These taxes can influence where wealthy people choose to live.
Key Facts
- The federal estate tax exemption is set at about $15 million per individual and $30 million for married couples starting 2026.
- Most estates in the U.S. are not subject to the federal estate tax because of this high exemption.
- A dozen states and Washington, D.C., have their own estate taxes, with different rules and thresholds.
- Connecticut plans to match the federal exemption levels in 2026, with a 12% estate tax above that amount.
- New York's estate tax exemption will be $7.35 million in 2026, and it uses a "cliff" rule where going slightly over the exemption means higher taxes.
- Rhode Island's estate tax applies to estates over $1.83 million, which is lower than the federal limit.
- Five states still have inheritance taxes: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
- Iowa eliminated its inheritance tax in 2025.
