Does Colorado have an inheritance tax in 2026? The clear and current answer is no. As of January 2026, Colorado does not charge a state inheritance tax on money, property, or other assets passed to beneficiaries after someone’s death. This remains an important fact for U.S. families, retirees, and estate planners who want to understand how wealth transfers are treated under state law.
Colorado’s position is simple: heirs do not owe the state a percentage of what they receive from an estate. Whether the inheritance comes in the form of real estate, savings, investments, business interests, or personal property, Colorado does not reduce that transfer with an inheritance tax.
Understanding What an Inheritance Tax Is
An inheritance tax is different from many other taxes people encounter. It is charged to the person who receives assets, not to the estate itself. In states that still have this type of tax, the amount owed often depends on how closely related the beneficiary is to the person who died. Spouses and children may receive large exemptions, while more distant relatives or unrelated heirs may pay higher rates.
Colorado does not follow this system. The state does not calculate inheritance tax based on family relationship, asset value, or type of property. From a state tax perspective, an inheritance is not treated as a taxable event simply because ownership changes due to death.
No State Estate Tax Either
Colorado also does not impose a state estate tax. An estate tax is charged on the total value of a person’s estate before assets are distributed to beneficiaries. This means the executor does not have to file a Colorado estate tax return or pay a state death tax before transferring property to heirs.
For residents and those who own property in Colorado, this creates a more predictable and straightforward estate settlement process. There is no state-level calculation that reduces the estate before distribution, and no separate tax bill for heirs after they receive assets.
How Colorado Reached This Point
Colorado once had laws that allowed the state to collect taxes tied to death and inheritance. Those systems were connected to federal tax structures that no longer exist. When federal rules changed and eliminated the credit that supported state-level death taxes, Colorado’s estate tax system effectively ended.
Since that time, the state has not enacted new laws to bring back either an inheritance tax or an estate tax. As of 2026, there is no state statute that requires heirs or estates to pay such taxes in Colorado.
Federal Taxes Still Matter for Large Estates
Although Colorado does not tax inheritances, the federal government may still impose estate taxes on very large estates. This tax is applied before assets are distributed and is based on total estate value above a high exemption threshold.
For most families, federal estate tax is not an issue because the exemption is substantial. However, it is important to understand that this federal obligation is separate from state rules. Even when federal estate tax applies, Colorado does not add its own inheritance tax on top of it.
What Beneficiaries Should Expect
People who inherit assets from a Colorado estate generally experience the following:
- No state inheritance tax deducted from their share.
- No Colorado tax form specifically for inheritance tax.
- No percentage owed to the state simply because they received property.
This does not mean heirs will never pay any taxes related to inherited assets. For example, withdrawing funds from an inherited retirement account can trigger income tax, and selling inherited real estate may result in capital gains tax. These are standard tax rules that apply after the inheritance is received, not taxes on the act of inheriting itself.
Does Relationship to the Deceased Change Anything?
In some states, tax rates depend on whether the beneficiary is a spouse, child, sibling, or unrelated individual. Colorado does not use this structure because it does not impose an inheritance tax at all.
A surviving spouse, adult child, distant cousin, or close friend all receive the same state tax treatment. Colorado does not reduce or increase the value of an inheritance based on family ties.
Out-of-State Property and Multi-State Estates
Complications can arise when a person who lived in Colorado owned property in another state. Some states still impose inheritance or estate taxes, and those rules can apply to property located within their borders.
In such cases, the beneficiary may face tax obligations in the state where the property is located, even though Colorado itself does not charge an inheritance tax. This is determined by the laws of the other state, not by Colorado’s tax code.
Why This Question Is So Important in 2026
Many people moving to Colorado come from states where inheritance or estate taxes exist. Others are planning retirement or thinking about how to pass wealth to the next generation. Knowing whether Colorado has an inheritance tax helps families:
- Estimate how much heirs will actually receive.
- Structure estate plans without needing to account for state inheritance deductions.
- Avoid unnecessary concern about state-level tax bills after a loved one’s death.
The stability of Colorado’s tax policy in this area provides reassurance. As of 2026, there is no state tax that targets inherited wealth.
Common Confusion About Taxes After Inheritance
It is easy to mistake other costs for inheritance taxes. Probate court fees, legal expenses, and appraisal costs can reduce the amount an heir ultimately receives, but these are not taxes. They are administrative expenses associated with settling an estate.
Similarly, property taxes continue on inherited real estate, and income taxes apply when inherited assets generate income. These obligations exist regardless of how the property was acquired and should not be confused with an inheritance tax.
Trusts and Inheritance in Colorado
Assets distributed from trusts are treated the same way as other inherited property. Colorado does not impose an inheritance tax on trust beneficiaries. The transfer of ownership itself is not taxed by the state.
However, income generated by trust assets may be subject to normal income tax rules once it is distributed or earned. Again, this is not an inheritance tax but part of standard tax law.
Planning Benefits in a State Without Inheritance Tax
The absence of an inheritance tax offers several advantages:
- Simpler estate planning, with fewer tax-driven restrictions.
- More flexibility in naming beneficiaries.
- Clearer expectations for heirs about what they will receive.
Families can focus on personal and financial goals rather than structuring transfers to minimize state inheritance taxes that do not exist.
Looking Ahead
Tax laws can change, but as of January 2026, there is no inheritance tax in Colorado and no state estate tax. Anyone planning an estate or expecting an inheritance can rely on the current legal framework, which does not impose state-level taxes on the transfer of wealth at death.
Does Colorado have an inheritance tax? The answer remains no, and that continues to make the state one of the more favorable places in the U.S. for families thinking about long-term financial planning and generational wealth.