Does Your State Have an Inheritance Tax?

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Posted on: November 6, 2023 | by: Graber & Johnson Law Group, LLC
How much will your children—or other heirs—pay when you die? That depends on whether you live in a state with no death tax.

Most Americans aren’t concerned with the $12.92 million threshold for the federal estate tax. However, some states are not as generous with estate tax exemptions, and others impose inheritance taxes on heirs, reports the article “States That Won’t Tax Your Death” from Kiplinger. State death taxes can become expensive for loved ones.

Death taxes are tax liabilities incurred by heirs when you die. In some states, heirs pay death taxes on even small inheritances. For example, heirs in Nebraska pay a death tax rate of 15% on inheritances over $25,000. The good news is that if you live in a state with no estate or inheritance tax, you don’t have to worry about a state death tax.

If taxes are a big consideration for where you live, consider the pros and cons before making any big decisions. Not every state is as tax-friendly regarding other taxes, fees, or the overall cost of living.

  • Alabama has no death taxes and low grocery taxes.
  • Alaska has no death taxes, and Alaska pays residents to live in the state through the Permanent Fund Dividend. In 2023, the payment was $1,312.
  • Arizona has no death tax, low-income taxes and a flat income rate of 2.5%.
  • Arkansas has no estate or death taxes, and a recent tax cut bill reduced income taxes.
  • California is generally a high-tax state with high costs of living, but there is no death tax.
  • Colorado has no death tax and the highest EV credit of any state.
  • Delaware is known to be very business friendly. However, it’s also a state with no sales tax, no state estate tax and no inheritance tax.
  • Florida has no death taxes, and what appeals to many new arrivals is no state income tax.
  • Georgia has no estate or inheritance tax.
  • Idaho doesn’t have an inheritance tax, but some types of retirement income, including pensions, are taxable.
  • Indiana has no inheritance tax and a fairly low flat-income tax rate of 3.15% (although some counties impose income taxes of their own).
  • Kansas has no inheritance tax or estate tax.
  • Louisiana has no death taxes and some of the lowest property taxes in the country.
  • Michigan has no estate tax or inheritance tax.
  • Mississippi taxes groceries but has no death tax or estate tax.
  • Missouri has no state death tax.
  • Montana has no state death tax.
  • Nevada has no inheritance taxes and no income tax.
  • New Hampshire doesn’t have a death tax, and there’s no personal income tax, but there is a tax on interest in dividends.
  • New Mexico has no estate or inheritance tax.
  • North Carolina has no death taxes and low property taxes.
  • North Dakota has no estate or inheritance tax, and the highest income tax rate is 2.5%.
  • Ohio has no death taxes but does have high property taxes.
  • Oklahoma has no death tax; low property and income tax rates never reach 5%.
  • South Carolina has no death tax or inheritance tax.
  • South Dakota has no inheritance tax and no state income taxes.
  • Tennessee has no estate, inheritance, or income tax.
  • Texas has no income tax and no inheritance tax.
  • Utah has no death tax but is one of 11 states that taxes Social Security retirement benefits.
  • Virginia has high income tax rates but no inheritance or state estate taxes.
  • West Virginia has no death tax.
  • Wisconsin has no death or state estate taxes. However, property and income tax rates are high.
  • Kiplinger ranks Wyoming as one of the best states for middle-class families because of the state’s overall low tax burden. There’s also no inheritance tax.

Reference: Kiplinger (Oct. 12, 2023) “States That Won’t Tax Your Death”

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