Understanding Estate and Inheritance Taxes by State: A 2024 Overview

Ever wondered how your state measures up when it comes to estate and inheritance taxes? The landscape is more diverse than you might think. Estate taxes are levied on the net value of an individual’s taxable estate at the time of death, before assets are distributed to heirs. On the other hand, inheritance taxes are paid by the recipient of a bequest, based on the value of assets received. In addition to the federal estate tax, which has a top rate of 40 percent, 12 states and the District of Columbia impose their own estate taxes. Six states levy inheritance taxes, with Maryland being the only state that has both. But how much are these taxes really? Hawaii and Washington have the highest top marginal estate tax rate at 20 percent, while Kentucky and New Jersey levy the highest top marginal inheritance tax rate at 16 percent. Connecticut stands out as the only state with a flat estate tax rate of 12 percent. As for exemptions, they range vastly from $2 million in Massachusetts to a whopping $15.49 million in Hawaii. To stay informed and plan efficiently, keep an eye on your state’s tax laws and consider seeking professional advice if necessary.

Source: taxfoundation.org