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Death and Taxes: Know Your Estate and Inheritance Tax

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Will your estate be taxed when you die? Many states have phased out estate and inheritance taxes, but there are a number of them still using this punitive tax. Those states include:

  • Connecticut
  • Hawaii
  • Illinois
  • Iowa
  • Kentucky
  • Maine
  • Maryland
  • Minnesota
  • Nebraska
  • New Jersey
  • New York
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Vermont
  • Washington
  • and Washington, D.C.

At The Tax Foundation, Joseph Johns explains the current estate and inheritance tax situation in America and the states, writing:

In addition to the federal estate tax, with a top rate of 40 percent, 12 states and the District of Columbia impose additional estate taxes, while six states levy inheritance taxes. Maryland is the only state that imposes both an estate and an inheritance tax.

Estate taxes are paid by a decedent’s estate before assets are distributed to heirs and are thus imposed on the overall value of the estate. Inheritance taxes are remitted by the recipient of a bequest and are thus based on the amount distributed to each beneficiary.

Most estate and inheritance taxes are progressive, with the tax on a decedent’s estate or a beneficiary’s inheritance exposed to rates that increase with the total value of assets. Hawaii and Washington have the highest top marginal estate tax rate at 20 percent, assessed on estates valued at $15.49 million and $9 million, respectively. Seven other states and the District of Columbia assess a 16 percent top marginal estate tax rate on estates valued between $2 million (Massachusetts) and $10.04 million (Illinois). Connecticut is the only state with a flat estate tax rate of 12 percent. Combined with its high exemption value of $13.61 million, Connecticut has a well-structured estate tax that makes it suitable for possible reforms and eventual elimination.

Likewise, Iowa has the lowest inheritance tax rate in the nation at 2 percent, while Kentucky and New Jersey have the highest top marginal inheritance tax rate of 16 percent as of January 1, 2024.

The Tax Foundation compares the states’ estate and inheritance taxes on the map below:

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Your Survival Guy keeps a close eye on the tax schemes among the states. You should too, especially if you're looking for a better America. None of Your Survival Guy's top ten Super States have an inheritance tax or an estate tax.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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