A state exemption is not always the same as a deduction that can simply be subtracted from the estate’s value. Some jurisdictions use graduated calculations, while others have special rules that affect how much tax applies once an estate crosses a threshold.
Families should also distinguish between the estate’s gross value and its taxable value. Applicable deductions, debts, charitable transfers, marital provisions, and other rules can affect the final calculation.
For federal purposes, the $15 million exclusion applies to the relevant estate and gift tax calculation, including adjusted taxable gifts. The federal filing threshold and portability rules also deserve attention. An executor may need to file a federal return to preserve a surviving spouse’s ability to use an unused exclusion, even when the estate owes no federal estate tax.
State filing obligations may differ. Executors should check the forms, deadlines, and valuation rules for the state connected to the deceased person and the property.
State-by-State Estate Tax Comparison for 2026
The exemption differences across the country can have a significant effect on estate planning. Oregon’s $1 million threshold is far below Connecticut’s $15 million exemption, even though both states operate under the same federal tax system.
For families comparing jurisdictions, the most useful figures are the applicable exemption, the highest marginal tax rate, and any special calculation rules.
| Jurisdiction | 2026 estate tax exemption | Highest rate |
|---|---|---|
| Connecticut | $15 million | 12% |
| Hawaii | $5.49 million | 20% |
| Illinois | $4 million | 16% |
| Maine | $7.16 million | 12% |
| Maryland | $5 million | 16% |
| Massachusetts | $2 million | 16% |
| Minnesota | $3 million | 16% |
| New York | $7.35 million | 16% |
| Oregon | $1 million | 16% |
| Rhode Island | $1,838,056 | 16% |
| Vermont | $5 million | 16% |
| Washington | $3 million for deaths on or after July 1 | 20% |
| District of Columbia | $4,988,400 | 16% |
These are general statutory figures for 2026. The tax an estate actually owes depends on the applicable calculation rules, deductions, property valuation, and filing circumstances.
Washington deserves particular attention because its exemption and rates changed during the year. Executors should apply the rules that correspond to the date of death.
Which States Collect Inheritance Tax in 2026?
Inheritance tax remains separate from estate tax. Five states impose this tax: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
The following comparison shows the general rates and important distinctions.
| State | General rate range | Important rule |
|---|---|---|
| Kentucky | 0%–16% | Treatment depends on the beneficiary’s class |
| Maryland | 0%–10% | Many close relatives qualify for exemptions |
| Nebraska | 0%–15% | Rates and exemptions depend on relationship |
| New Jersey | 0%–16% | Beneficiary classification determines liability |
| Pennsylvania | 0%–15% | Rates vary by relationship to the deceased |
The rates do not apply identically to every beneficiary. A spouse may qualify for an exemption, while a more distant relative or unrelated recipient may owe tax.
Kentucky Inheritance Tax Rules
Kentucky does not impose a separate estate tax, but it does tax certain inheritances. Its inheritance tax depends on the recipient’s relationship to the deceased person and the value of the transferred property.
Certain close relatives qualify for exemptions. Other beneficiaries may receive a limited exemption and face rates ranging from 4% to 16%, or 6% to 16%, depending on their classification.
Kentucky also has rules for payment timing. Eligible taxpayers who pay within the prescribed period may qualify for a discount. Executors should check the applicable requirements before submitting payment.
Maryland Inheritance Tax Rules
Maryland generally imposes a 10% inheritance tax on taxable transfers to beneficiaries who do not qualify for an exemption.
The state also imposes estate tax, creating two separate considerations during estate administration. The relationship between the deceased person and each beneficiary can affect inheritance tax, while the taxable estate determines potential estate tax exposure.
Families with property or investments connected to multiple states should also consider the applicable rules for determining where those assets are located for inheritance tax purposes.
Nebraska Inheritance Tax Rules
Nebraska sets inheritance tax rates according to the relationship between the beneficiary and the deceased person. Its general rates range from 0% to 15%.
The published exemption can reach $100,000 for certain beneficiary classes. However, that maximum does not apply uniformly to every recipient.
Executors should identify the applicable beneficiary category before estimating the amount due. The classification can make a substantial difference in the final calculation.
New Jersey Inheritance Tax Rules
New Jersey no longer imposes its former estate tax on deaths occurring after 2017. However, inheritance tax remains in effect for certain transfers.
The state’s rates range from 0% to 16%. Qualifying close relatives generally receive favorable treatment, while other beneficiaries may face tax on amounts above their applicable exemptions.
Families should not assume that the elimination of New Jersey’s estate tax removed every state tax obligation associated with an inheritance.
Pennsylvania Inheritance Tax Rules
Pennsylvania applies inheritance tax at rates that depend on the recipient’s relationship to the deceased person. The general range is 0% to 15%.
Certain beneficiaries may qualify for special treatment under state law. The tax calculation also depends on the property transferred and the circumstances of the inheritance.
Because the rules differ by beneficiary category, an estate’s total value alone does not determine how much each recipient will owe.
States Without Estate or Inheritance Taxes
Thirty-four states generally impose neither a separate state estate tax nor an inheritance tax in 2026.
They are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.
Residents of these states may still need to consider federal estate tax requirements. Inherited assets can also generate taxable income or capital gains under applicable rules.
The absence of a state estate or inheritance tax does not eliminate probate requirements, estate administration costs, or every other possible tax consequence.
How Inherited Property Can Affect Taxes
An inheritance may include a home, stocks, bonds, retirement accounts, cash, or an ownership interest in a business. Each type of asset can have different tax implications.
Cash inheritances generally do not count as federal taxable income simply because a beneficiary receives them. However, interest and other income earned after the transfer may be taxable.
Inherited investments may receive a tax basis determined under federal rules, often based on fair market value at the date of death. Special circumstances and exceptions can affect that treatment.
Retirement accounts require separate attention. Distributions from inherited traditional retirement accounts may be taxable, and beneficiaries may have to follow specific withdrawal deadlines. Inherited Roth accounts can also have distribution requirements even when qualifying withdrawals are tax-free.
Real estate creates another consideration. A later sale may generate a capital gain or loss, depending on the property’s tax basis, sale price, and applicable rules.
These issues remain separate from whether the estate itself owes estate tax or whether a beneficiary owes state inheritance tax.
Frequently Asked Questions
What is the federal estate tax exclusion in 2026?
The federal basic estate and gift tax exclusion is $15 million per individual for 2026. The applicable calculation can also depend on adjusted taxable gifts and other statutory provisions.
How many states impose estate taxes in 2026?
Twelve states impose estate taxes, along with the District of Columbia. The exemptions range from $1 million in Oregon to $15 million in Connecticut.
Which states impose inheritance taxes?
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania impose inheritance taxes in 2026. Maryland also imposes estate tax.
Can a family owe state estate tax when no federal estate tax is due?
Yes. State exemptions can be much lower than the federal exclusion. An estate may exceed a state’s threshold while remaining below the federal threshold.
Are inherited assets always tax-free?
No. Receiving an inheritance generally does not create federal taxable income by itself, but inherited retirement accounts, income-producing assets, and later property sales can create tax obligations.
Does Maryland impose two separate taxes on estates and inheritances?
Yes. Maryland has both an estate tax and an inheritance tax. Their application depends on the estate’s circumstances and the beneficiary’s eligibility for exemptions.
Which state has the lowest estate tax exemption?
Oregon has a $1 million estate tax exemption in 2026. Its threshold is considerably lower than the federal exclusion.
Can the date of death change the applicable tax rules?
Yes. State laws can change during a calendar year. Washington’s 2026 estate tax changes illustrate why the date of death matters when determining the applicable exemption and rate.
Final Outlook for Estate and Inheritance Taxes by State, 2026
Estate and Inheritance Taxes by State, 2026, require careful attention because federal and state rules do not always align. The federal exclusion stands at $15 million per individual, but several states impose taxes at substantially lower estate values. Five states also maintain inheritance taxes that can affect beneficiaries differently according to their relationship to the deceased person.
Families should review the rules that apply to the deceased person’s domicile, the location of relevant property, and each beneficiary’s circumstances. Accurate valuation, timely filing, and an understanding of available exemptions can help prevent avoidable mistakes during estate administration.
Have you encountered estate or inheritance tax rules that differ from those in another state? Share your experience in the comments and stay informed about the latest confirmed tax developments.