States with no inheritance tax dominate the U.S. tax landscape in 2026, making wealth transfers simpler for millions of families. Current state tax laws confirm that only a small number of states still impose inheritance tax, while most states allow beneficiaries to receive assets without paying this specific tax.
Inheritance tax applies to the person receiving assets after someone dies. This differs from estate tax, which is paid by the estate before distribution. Knowing which states do not charge inheritance tax is essential for estate planning, relocation decisions, and retirement strategies.
Understanding Inheritance Tax in 2026
Inheritance tax is a state-level tax on property, money, or investments received from a deceased individual. The amount owed depends on several factors:
- Relationship to the deceased
- Size of the inheritance
- State exemption rules
- Applicable tax rates
Spouses are fully exempt in every inheritance-tax state. Children and close relatives often pay little or nothing. More distant heirs typically face higher rates.
There is no federal inheritance tax in the United States.
States With No Inheritance Tax in 2026
Most U.S. states currently do not impose inheritance tax. This trend reflects decades of policy changes aimed at reducing so-called death taxes and attracting residents.
States Without Inheritance Tax
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Kansas
- Louisiana
- Maine
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nevada
- New Hampshire
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington (estate tax applies but no inheritance tax)
- West Virginia
- Wisconsin
- Wyoming
These states allow beneficiaries to receive inherited assets without paying inheritance tax at the state level.
States That Still Have Inheritance Tax
As of 2026, inheritance tax remains in a limited group of states:
- Kentucky
- Maryland
- Nebraska
- New Jersey
- Pennsylvania
Iowa completed its inheritance-tax phase-out and no longer applies the tax for deaths beginning in 2025.
Key Facts About These States
- Spouses are exempt everywhere
- Children are often exempt or taxed minimally
- Rates vary widely by state
- Non-relatives usually pay the highest tax
Because only a few states maintain inheritance tax, geographic planning plays a major role in estate strategies.
Inheritance Tax vs Estate Tax
Many Americans confuse inheritance tax with estate tax. They operate differently.
Quick Comparison
| Feature | Inheritance Tax | Estate Tax |
|---|---|---|
| Who pays | Beneficiary | Estate |
| Government level | State | State or federal |
| Common nationwide | Rare | More common |
A state can have no inheritance tax but still charge estate tax. Examples include:
- New York
- Massachusetts
- Oregon
- Washington
This distinction is especially important for higher-value estates.
Why Most States Removed Inheritance Tax
Over time, states reduced reliance on inheritance tax. Several factors drove this shift:
- Competition to attract retirees
- Efforts to keep wealthy residents from relocating
- Administrative complexity
- Political pressure to reduce death-related taxes
As a result, states with no inheritance tax now represent the overwhelming majority.
How This Affects Estate Planning
Living in a state without inheritance tax simplifies wealth transfer but does not eliminate planning needs.
Major Advantages
- Beneficiaries keep more of their inheritance
- Reduced administrative burden
- Fewer unexpected tax liabilities
- Easier long-term family planning
Still, families must consider:
- State estate taxes
- Federal estate tax thresholds
- Residency rules
- Trust strategies
Estate planning remains important regardless of location.
Popular Retirement States With No Inheritance Tax
Tax policy strongly influences retirement migration patterns. Several states without inheritance tax consistently attract retirees:
- Florida
- Texas
- Arizona
- Nevada
- South Carolina
These states often combine favorable tax treatment with lower overall tax burdens and strong relocation trends.
For many households, avoiding inheritance tax is part of broader retirement planning.
Common Misunderstandings
Misconceptions about inheritance tax remain widespread.
Myth: The federal government charges inheritance tax
Only estate tax exists at the federal level.
Myth: Heirs always pay inheritance tax
Most heirs in most states pay nothing.
Myth: Moving late automatically avoids inheritance tax
Residency rules can be complex and require documentation.
Myth: No inheritance tax means no taxes at death
Estate taxes, capital gains, and other rules may still apply.
Clear understanding helps families avoid planning mistakes.
Recent Changes Influencing States With No Inheritance Tax
The most significant recent policy development is Iowa’s completed phase-out of inheritance tax, effective for deaths starting in 2025. This change further reduced the number of inheritance-tax states.
No new states introduced inheritance tax in 2026. The long-term national trend continues toward elimination rather than expansion.
This keeps states with no inheritance tax firmly dominant across the country.
What Families Should Watch Next
Tax policy can evolve, especially around estate taxation.
Key areas to monitor:
- Federal estate tax threshold changes after scheduled policy shifts
- State budget pressures
- Migration trends affecting tax policy decisions
- Ongoing retirement-driven tax competition
Location decisions remain one of the most powerful estate planning tools.
Conclusion
The list of states with no inheritance tax remains extensive in 2026, allowing most Americans to transfer assets to heirs without this additional tax burden. Only a handful of states continue to impose inheritance tax, and recent policy changes reinforce the broader movement away from these taxes.
Families benefit from understanding how inheritance tax differs from estate tax and how state residency influences wealth transfer outcomes.
Have thoughts about inheritance tax or planning strategies? Share your perspective or return for the latest updates as tax policies continue to evolve.