States Without an Estate Tax or Inheritance Tax

A List of States Without an Estate Tax or an Inheritance Tax

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Many U.S. states don't collect an estate tax or an inheritance tax—often combined and known as the "death tax"—but several do. States that don't have this tax include California, Ohio, Michigan, and more. There are 33 in total, so it's important to know which states have an estate tax or an inheritance tax, and which don't. It all depends on where you or a loved one lives, and the differences can be drastic.

Key Takeaways

  • Many states do not collect a "death tax"—estate or inheritance taxes—when someone dies.
  • Estate taxes are paid by the estate, whereas inheritance taxes are levied on and paid by the beneficiary.
  • Maryland is the only state that levies both estate and inheritance taxes.
  • Nebraska, Hawaii, and Washington have the highest death taxes.

Estate and Inheritance Tax Terms To Know

Understanding what individual states do and don't do begins with grasping the various terms involved with estate and inheritance taxes, and what they mean for you.

The term "death tax" is something of an umbrella term that covers both estate and inheritance taxes. Estate taxes are levied against an estate based on its value, but only values above a certain threshold called an "exemption" are taxed on that portion.

Note

A $1 million estate in a state with a $500,000 exemption would be taxed on the remaining $500,000.

The estate tax is paid by the estate, whereas an inheritance tax is levied on, and paid by, the beneficiary who receives a specific bequest. It's based on the value of that transfer, not the whole estate. Most states that have an inheritance tax will exempt very close relatives, and sometimes the deceased will indicate in their will that they want the estate to cover this tax.

"Portability" is another common term in estate planning. It means that any exemptions not used by one spouse's estate can be transferred to the surviving spouse for later use at their time of death.

States Without Death Taxes

There are 33 states that do not collect an estate tax or an inheritance tax:

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Colorado
  7. Delaware
  8. Florida
  9. Georgia
  10. Idaho
  11. Indiana
  12. Kansas
  13. Louisiana
  14. Michigan
  15. Mississippi
  16. Missouri
  17. Montana
  18. Nevada
  19. New Hampshire
  20. New Mexico
  21. North Carolina
  22. North Dakota
  23. Ohio
  24. Oklahoma
  25. South Carolina
  26. South Dakota
  27. Tennessee
  28. Texas
  29. Utah
  30. Virginia
  31. West Virginia
  32. Wisconsin
  33. Wyoming

Note

The federal estate tax applies to estates that exceed a certain amount. For tax year 2022, that threshold is $12.06 million, and for tax year 2023, it's $12.92 million. The federal government does not impose an inheritance tax.

States That Do Collect Estate or Inheritance Taxes

Many states collect just one type of tax—an estate tax or an inheritance tax. Maryland is the only state that levies both.

  1. Connecticut
  2. Hawaii
  3. Illinois
  4. Iowa
  5. Kentucky
  6. Maine
  7. Maryland
  8. Massachusetts
  9. Minnesota
  10. Nebraska
  11. New Jersey
  12. New York
  13. Oregon
  14. Pennsylvania
  15. Rhode Island
  16. Vermont
  17. Washington
  18. Washington, D.C.

States That Have Repealed Estate Taxes

Seven states have repealed their estate taxes since 2010. Kansas and Oklahoma abolished estate taxes by legislative action on Jan. 1, 2010. North Carolina also repealed its estate tax on Jan. 1, 2010, but it reinstated it a year later. It later turned around and repealed the tax again, retroactively to Jan. 1, 2013. The Ohio estate tax was repealed as of Jan. 1, 2013, under Ohio budget laws. Tennessee phased out its estate tax in 2016. Delaware repealed its death tax as of Jan. 1, 2018. New Jersey phased out its estate tax in 2018.

Other Death Tax Changes by State

Hawaii

Hawaii enacted an estate tax effective May 1, 2010. Then, in May 2012, the state adjusted its laws to provide that the Hawaii estate tax exemption would be tied to the federal estate tax exemption for decedents dying after Jan. 25, 2012.

Note

Hawaii is one of only two states that offer portability of their estate tax exemptions. Maryland is the other.

Illinois

Estate taxes were repealed in Illinois on Jan. 1, 2010, although they were later reinstated effective Jan. 1, 2011. The estate tax exemption increased two more times, settling on $4 million effective Jan. 1, 2013.

Indiana

Indiana passed laws in 2012 that would have phased out its inheritance tax by 2022. The inheritance tax exemption was increased from $100,000 to $250,000 for certain family members effective Jan. 1, 2012. Nonetheless, Indiana's inheritance tax was repealed retroactively to Jan. 1, 2013, in May 2013.

Maine

Maine's estate tax exemption was increased to $6.01 million for tax year 2022.

Maryland

The Maryland Estate Tax/Unified Credit was signed into law on May 15, 2014. The law repealed and re-enacted Maryland's estate tax so the exemption would increase. It was changed to $5 million in 2019.

Note

Maryland has recognized the portability of its estate tax exemption between married couples since 2019.

Minnesota

In July 2013, Minnesota adjusted its estate tax laws as they applied to non-residents who own real estate there. This legislation included Minnesota property held in pass-through entities such as S corporations, partnerships, LLCs, or a nonresident's estate.

Then, under legislation signed in March 2014, the state estate tax exemption was retroactively increased to $1.2 million for all 2014 deaths. The estate tax rate was adjusted so that the first dollars are taxed at a 9% rate, which ultimately maxes out at 16%. The estate tax exemption was then increased in $200,000 increments to reach $3 million in 2020.

Note

Minnesota law also allows married couples to use ABC Trust planning to defer the payment of all estate taxes until after the second spouse's death.

Finally, the law taxing a nonresident decedent's interest in a pass-through entity was modified to exclude certain publicly traded entities. However, it still applies to those taxed as partnerships or S corporations that own a closely held business, farm, or cabin.

New York

New York made significant changes to its estate tax laws in April 2014 by increasing the state exemption from $1 million to $2.06 million for deaths occurring on or after April 1, 2014, and before April 15, 2015. The exemption continued to increase annually until it matched the federal estate tax exemption in 2019. It is adjusted for inflation on an annual basis now and is $6.11 million for tax year 2022.

Oregon

Oregon's estate tax rates changed on Jan. 1, 2012, so that estates valued between $1 million and $2 million would pay slightly less in estate taxes, and estates valued over $2 million would pay more. Then a November 2012 ballot measure completely repealed the state's estate tax by a majority vote.

Rhode Island

Rhode Island has an estate tax exemption of $1.64 million for tax year 2022. The exemption is adjusted annually for inflation.

Vermont

Vermont's estate tax exemption is $5 million.

Washington

Washington made several changes to its state estate tax laws in June 2013. The $2 million estate tax exemption was indexed for inflation beginning in 2014. An estate tax deduction of up to $2.5 million was available for certain family-owned business interests if the values didn't exceed $6 million. In 2018, Washington made its estate tax exemption worth $2.19 million.

Frequently Asked Questions (FAQs)

Do any states have both an inheritance tax and a state tax?

Only one state, Maryland, levies both taxes.

Which states have the highest death taxes?

Nebraska had an inheritance tax rate of 18% until 2022. That rate was decreased to 15% for tax year 2023. The states with the highest estate tax rates are Hawaii and Washington, which both have a top rate of 20%.

How much money can you inherit without having to pay federal tax on it?

You won't have to pay any tax on money that you inherit, but the estate of the person who leaves money to you will be subject to an estate tax if the estate's gross assets and any prior taxable gift amounts combined add up to more than a certain amount for the tax year.

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Sources
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  2. The American College of Trust and Estate Counsel. “State Death Tax Chart.“

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  4. Comptroller of Maryland. "Estate and Inheritance Tax Information."

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  12. State of Indiana. “Indiana Inheritance Tax Frequently Asked Questions,” Page 6-7.

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  19. Minnesota Legislature. “The Minnesota Estate Tax,” Pages 1-2.

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  24. State of Oregon, Office of the Secretary of State. "Detailed Displayed: 1 Record: 2012, Estate."

  25. Rhode Island Department of Revenue, Division of Taxation. "Rhode Island Tax Changes To Take Effect in 2022."

  26. Vermont Agency of Administration Department of Taxes. “Estate Tax.”

  27. Washington State Legislature. “RCW 83.100.048. Deduction—Qualified Family-Owned Business Interests.”

  28. Department of Revenue Washington State. "Estate Tax Tables."

  29. Unicameral Update, The Nebraska Legislature. "Inheritance Tax Cut Approved."

  30. IRS. "Estate Tax."

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