18 States With Scary Death Taxes

Connecticut

Estate tax: Yes

Estate tax exemption: $12.92 million

Estate tax rate: 12%

Inheritance tax: No

The Constitution State’s estate tax exemption is the same as the federal estate tax exemption, and the tax due is limited to $15 million. However, Connecticut is the only state that imposes a gift tax on assets you give away while you’re alive. 

If you make taxable gifts during the year that exceed $17,000—the federal gift tax exclusion for 2023—state law requires that you file a Connecticut estate and gift tax return. In 2023, you’ll owe taxes if the aggregate value of gifts made since 2005 exceeds $12.92 million. The state imposes estate and gift taxes at a flat 12% rate.

District of Columbia

Estate tax: Yes

Estate tax exemption level: $4,528,800

Estate tax rates: 11.2%–16%

Inheritance tax: No

For 2023, Washington, D.C., estates valued at more than $4,528,800 are subject to a city estate tax, at rates ranging from 11.2% to 16%.

Hawaii

Estate tax: Yes

Estate tax exemption level: $5.49 million

Estate tax rates: 10%–20%

Inheritance tax: No

At $5.49 million, the Aloha State has one of the higher state estate tax exclusion amounts, though it isn’t adjusted annually for inflation. The current Hawaii estate tax rates range from 10% to 20%. The highest rate is for estates worth more than $10 million.

Illinois

Estate tax: Yes

Estate tax exemption level: $4 million

Estate tax rates: 0.8%–16%

Inheritance tax: No

The Illinois $4 million exemption (after inclusion of adjusted taxable gifts) is lower than the federal exemption and isn’t adjusted annually for inflation. Republican lawmakers in the state have proposed repealing or moderating the tax, arguing that it would keep more people in the state. So far, those efforts have been unsuccessful.

Iowa

Estate tax: No

Inheritance tax: Yes

Inheritance tax rates: 2%–6%

The Hawkeye State is in the process of phasing out its inheritance tax, but it won’t be eliminated until 2025. In the meantime, estates worth less than $25,000 are exempt. In addition, no tax is due on property inherited by a spouse, parent, grandparent, great-grandparent, child, stepchild, grandchild, or great-grandchild.

In 2023, brothers, sisters, sons-in-law, and daughters-in-law in Iowa will be hit with a 2% to 4% tax, depending on the value of the property they inherit. Uncles, aunts, nieces, nephews and all other heirs will be taxed at rates ranging from 4% to 6%. The rates will drop in 2024, and the tax will disappear in 2025. 

Kentucky

Estate tax: No

Inheritance tax: Yes

Inheritance tax rates: 4%–16%

As with other states with an inheritance tax, the amount of tax owed in the Bluegrass State depends on the heir’s relationship to the person who died and the value of the inherited property. 

The tax isn’t an issue for spouses, parents, children, grandchildren and siblings. They’re all exempt from Kentucky’s inheritance tax.

However, the Kentucky tax can be a nightmare for other heirs. Nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles, and great-grandchildren are taxed at rates ranging from 4% to 16%, depending on the value of the property inherited. The first $1,000 of property is exempt. 

All other heirs are taxed at rates ranging from 6% to 16%; for those heirs, only the first $500 of inherited property is exempt. 

Maine

Estate tax: Yes

Estate tax exemption level: $6.41 million

Estate tax rates: 8%–12%

Inheritance tax: No

For 2023, the Pine Tree State’s estate tax applies to estates worth more than $6.41 million; the amount is adjusted each year for inflation. However, the top estate tax rate in Maine is only 12%, which is tied with Connecticut for the lowest top estate tax rate in the nation.

Maryland

Estate tax: Yes

Estate tax exemption level: $5 million

Estate tax rate: 0.8%–16%

Inheritance tax: Yes

Inheritance tax rate: 10% 

The Free State’s 2023 estate tax exemption of $5 million in 2023 includes any predeceased spouse’s unused exclusion amount. Rates range from 0.8% to 16%.

Although Maryland also has an inheritance tax with a flat 10% rate, the list of heirs exempt from paying it includes the decedent’s spouse, parents, grandparents, children, grandchildren, siblings, sons-in-law, daughters-in-law and the surviving spouse of a deceased child. 

Massachusetts

Estate tax: Yes

Estate tax exemption level: $1 million

Estate tax rates: 0.8%–16%

Inheritance tax: No

With an exemption of just $1 million, the Bay State is less friendly to estates than most other states, including neighboring Rhode Island and Connecticut, which also impose estate taxes. Massachusetts provides an unlimited marital deduction for property left to a surviving spouse and an unlimited deduction for property left to a qualified charity.

Minnesota

Estate tax: Yes

Estate tax exemption level: $3 million

Estate tax rates: 13%–16%

Inheritance tax: No

Like most states on this list, the North Star State has an exclusion that is significantly lower than the federal estate tax exemption. In addition, Minnesota looks back to include as part of your estate any taxable gifts made within three years prior to death. Tax rates range from 13% to 16%.

Nebraska

Estate tax: No

Inheritance tax: Yes

Inheritance tax rates: 1%–15%

With Nebraska’s inheritance tax, the closer the heir’s relationship to the decedent, the smaller the tax rate and the greater the exemption. Spouses are exempt from the tax. In addition, effective this year, the state’s inheritance tax doesn’t apply to any heir who is 21 or younger, regardless of their relationship to the decedent. 

The tax on other heirs who are immediate relatives, such as parents, grandparents, siblings, and children, is only 1% and doesn’t apply to property that is worth less than $100,000.

For certain relatives outside the immediate family, including uncles, aunts, nieces, and nephews, the Nebraska tax rate is 11%, and the exemption amount is $40,000. For all other heirs, the tax is imposed at a 15% rate on property worth $25,000 or more.

New Jersey

Estate tax: No

Inheritance tax: Yes

Inheritance tax rates: 11%–16%

The Garden State imposes a tax on inherited property with a value of $500 or more. However, the decedent’s spouse, domestic partner, parents, grandparents, children and grandchildren are exempt from inheritance taxes in New Jersey. 

The first $25,000 of property inherited by a decedent’s sibling, son-in-law or daughter-in-law is also exempt. After that, those heirs must pay the inheritance tax at rates ranging from 11% to 16%. All other individual heirs pay a 15% tax on the first $700,000 of inherited property and a 16% tax on everything over $700,000.

New York

Estate tax: Yes

Estate tax exemption: $6.58 million

Estate tax rates: 3.06%–16%

Inheritance tax: No

New York’s estate tax exemption is adjusted each year for inflation, and rates range from 3.06% to 16%. Taxable gifts made by the decedent as a New York resident within three years prior to death are included as part of the estate. 

Notably, New York’s estate tax is a “cliff tax.” That means if the value of the estate is more than 105% of the current exemption, the entire estate will be subject to state estate tax.

Oregon

Estate tax: Yes

Estate tax exemption level: $1 million

Estate tax rates: 10%–16%

Inheritance tax: No

The Beaver State is the worst place in the U.S. to die if you’re concerned about estate taxes. Oregon has resisted the trend to raise its estate tax exemption or even adjust it for inflation. In addition to taxing estates valued at as little as $1 million, Oregon imposes a relatively high minimum tax rate of 10% on even the smallest of qualifying estates. 

Pennsylvania

Estate tax: No

Inheritance tax: Yes

Inheritance tax rates: 4.5%–15%

Although the Keystone State has no estate tax, the inheritance tax in Pennsylvania could prove costly for adult children and other heirs. Spouses and the decedent’s parents (if the decedent was age 21 or younger) are exempt. There is also no tax on property inherited from a member of the military who died as a result of an illness or injury incurred while on active duty. 

However, children and grandchildren will pay a 4.5% inheritance tax, siblings will pay 12%, and all other heirs will pay 15%. A 5% discount is allowed if the tax is paid within three months of the decedent’s death. 

Rhode Island

Estate tax: Yes

Estate tax exemption level: $1,733,264

Estate tax rates: 0.8%–16%

Inheritance tax: No

Although the Ocean State adjusts its estate tax exemption annually for inflation, The Rhode Island exemption amount is one of only three in the nation that are less than $2 million. Rates range from 0.8% to 16%.

Vermont

Estate tax: Yes

Estate tax exemption level: $5 million

Estate tax rate: 16%

Inheritance tax: No

Unlike most other states with an estate tax, Vermont doesn’t impose a graduated estate tax rate. Assets that exceed the $5 million exemption are taxed at a flat rate of 16%. 

Washington

Estate tax: Yes

Estate tax exemption level: $2.193 million

Estate tax rates: 10%–20%

Inheritance tax: No

Washington has no personal income tax (but it has a state capital gains tax), so it’s not surprising that it looks elsewhere for revenue. Its estate tax exemption of $2.193 million is adjusted annually for inflation. Tax rates range from 10% to 20%. The state offers an additional $2.5 million deduction for family-owned businesses valued at less than $6 million.