Whether you're settling a loved one’s estate or planning ahead to ease the burden on your own family, inheritance taxes can play a significant role in what comes next. 

After someone passes, inheritance taxes may affect how—and when—assets are distributed to heirs. 

For those preparing in advance, understanding how inheritance taxes work can inform key decisions about trusts, gifts, and insurance. 

Each state has its own rules, and the details can be easy to overlook until they suddenly matter. In this guide, we’ll walk through what to expect and how to navigate inheritance taxes depending on where you live.

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First things first: understanding the difference between inheritance tax and estate tax

🧾 Inheritance tax is a tax on the beneficiary 

The inheritance tax is imposed on individual recipients of an inheritance based on what they personally receive.

• Who pays it: The beneficiary pays the tax.
• Rates depend on relationship: Closer relatives (like spouses or children) often pay little or nothing, while distant relatives or unrelated individuals pay higher rates.
• Amount of tax is based on: The amount received and the recipient’s relationship to the deceased.

There is no federal inheritance tax in the United States. Some states impose state-level inheritance taxes.

🏛 Estate tax is a tax on the estate itself 

The estate tax is a levy on the total value of a deceased person’s assets before they are distributed to heirs.

• Who pays it: The estate pays this tax before any inheritance is passed on.
• Federal estate tax: Imposed by the federal government on estates exceeding a certain threshold
• State estate tax: Some states impose their own estate taxes, often with lower exemption thresholds than the federal level
• Based on: The net value of the entire estate (assets minus liabilities)
  
  

A State-by-State Guide to Inheritance Taxes

To make inheritance taxes easier to navigate, the team at Elayne has compiled a state-by-state guide for specific state tax implications. However, it’s always smart to work with a professional who can help you navigate these complexities and potentially reduce or avoid tax burdens where legally possible. 

Alabama Inheritance Tax

Alabama does not have an inheritance tax. Beneficiaries who inherit assets from someone who lived in Alabama will not owe any state-level inheritance tax.

Alaska Inheritance Tax

Alaska does not impose an inheritance tax. Inheritances received in Alaska are not subject to state taxation.

Arizona Inheritance Tax

Arizona has no inheritance tax. Beneficiaries receiving assets from an estate in Arizona will not face state-level tax on their inheritance.

Arkansas Inheritance Tax

There is no inheritance tax in Arkansas. All inherited assets pass free of state-level inheritance tax.

California Inheritance Tax

California does not have an inheritance tax. Individuals who inherit property or assets from a California resident do not owe state inheritance tax.

Colorado Inheritance Tax

Colorado imposes no inheritance tax. Beneficiaries will not be taxed by the state on inherited money or property.

Connecticut Inheritance Tax

There is no inheritance tax in Connecticut, but state estate taxes do apply. Those handling or receiving large estates should consult a professional to understand possible estate tax obligations.

Delaware Inheritance Tax

Delaware does not have an inheritance tax. The state also eliminated its estate tax in 2018, offering a more tax-friendly environment for estates.

Florida Inheritance Tax

Florida imposes no inheritance tax. Beneficiaries inheriting from Florida residents will not owe state tax on their inheritance.

Georgia Inheritance Tax

Georgia has no inheritance tax. Inherited assets in Georgia are not taxed at the state level.

Hawaii Inheritance Tax

There is no inheritance tax in Hawaii, but estates exceeding certain thresholds may be subject to a Hawaii estate tax.

Idaho Inheritance Tax

Idaho does not charge an inheritance tax. Inheritances received in the state are free from state-level inheritance tax.

Illinois Inheritance Tax

Illinois has no inheritance tax, but estates valued over $4 million may owe a state estate tax. Beneficiaries should check estate values carefully.

Indiana Inheritance Tax

Indiana's inheritance tax was fully repealed in 2013. Inheritances received after that date are not taxed by the state.

Iowa Inheritance Tax

Iowa is phasing out its inheritance tax, and it is fully repealed for deaths occurring on or after January 1, 2025. In some cases before that date, tax may still apply depending on the heir’s relationship to the decedent.

Kansas Inheritance Tax

Kansas does not impose an inheritance tax. Beneficiaries in Kansas receive their inheritance free of state-level taxes.

Kentucky Inheritance Tax

Kentucky has an active inheritance tax. It applies based on the heir’s relationship to the deceased:

• Class A (spouse, child, parent): Exempt
  
  
• Class B and C (siblings, nieces/nephews, friends): Taxed 4%–16%
  
  

Louisiana Inheritance Tax

Louisiana imposes no inheritance tax. All inherited assets are passed without state-level inheritance tax.

Maine Inheritance Tax

There is no inheritance tax in Maine, but estates over $6.8 million are subject to a Maine estate tax.

Maryland Inheritance Tax

Maryland is one of the few states with both an inheritance and an estate tax:

• Spouses, children, parents, siblings: Exempt
  
  
• Other heirs: Subject to a 10% inheritance tax
  Maryland also has an estate tax for estates exceeding $5 million.
  
  

Massachusetts Inheritance Tax

Massachusetts does not charge inheritance tax, but estates exceeding $2 million may owe state estate tax.

Michigan Inheritance Tax

Michigan has no inheritance tax. Beneficiaries receive their inheritance tax-free at the state level.

Minnesota Inheritance Tax

There is no inheritance tax in Minnesota, but estates exceeding roughly $3 million may be subject to Minnesota estate tax.

Mississippi Inheritance Tax

Mississippi does not impose an inheritance tax. Inheritances are not taxed by the state.

Missouri Inheritance Tax

There is no inheritance tax in Missouri. Beneficiaries do not owe state tax on inherited assets.

Montana Inheritance Tax

Montana does not have an inheritance tax. Inherited property is not subject to taxation by the state.

Nebraska Inheritance Tax

Nebraska does impose an inheritance tax, with rates based on relationship:

• Immediate family (children, parents): 1% over $40,000
  
  
• Extended family (siblings, nieces/nephews): 11% over $15,000
  
  
• Others (friends, distant relatives): 15% over $10,000
  Note: These rates can vary by county.
  
  

Nevada Inheritance Tax

Nevada has no inheritance tax. Inherited money or assets are not taxed by the state.

New Hampshire Inheritance Tax

New Hampshire does not impose an inheritance tax. Inheritances are not taxed at the state level.

New Jersey Inheritance Tax

New Jersey enforces an inheritance tax, with rules based on the heir’s classification:

• Class A (spouse, children, parents): Exempt
  
  
• Class C (siblings, in-laws): 11%–16% on amounts over set thresholds
  
  
• Class D (friends, distant relatives): 15%–16%
  The estate tax was repealed in 2018, but the inheritance tax remains in effect.
  
  

New Mexico Inheritance Tax

New Mexico has no inheritance tax. Beneficiaries do not pay tax on inherited assets.

New York Inheritance Tax

There is no inheritance tax in New York, but estates over $6.94 million may owe state estate tax.

North Carolina Inheritance Tax

North Carolina does not impose an inheritance tax. Heirs inherit assets tax-free at the state level.

North Dakota Inheritance Tax

North Dakota has no inheritance tax. State tax does not apply to inherited assets.

Ohio Inheritance Tax

Ohio's inheritance tax was repealed in 2013. All inheritances after that are exempt from state inheritance tax.

Oklahoma Inheritance Tax

Oklahoma does not charge inheritance tax. Inherited property is not subject to state taxation.

Oregon Inheritance Tax

There is no inheritance tax in Oregon, but estates over $1 million are subject to state estate tax.

Pennsylvania Inheritance Tax

Pennsylvania imposes one of the broadest inheritance taxes in the U.S.:

• Spouse: Exempt
  
  
• Children and grandchildren: 4.5%
  
  
• Siblings: 12%
  
  
• Other heirs: 15%
  
  

Rhode Island Inheritance Tax

Rhode Island does not have an inheritance tax, but estates exceeding $1.7 million may owe estate tax.

South Carolina Inheritance Tax

South Carolina imposes no inheritance tax. Assets passed on after death are not taxed at the state level.

South Dakota Inheritance Tax

There is no inheritance tax in South Dakota. Inheritances are state-tax-free.

Tennessee Inheritance Tax

Tennessee repealed its inheritance tax in 2016. Inheritances are no longer taxed by the state.

Texas Inheritance Tax

Texas does not have an inheritance tax. Beneficiaries will not owe taxes on inherited assets at the state level.

Utah Inheritance Tax

Utah imposes no inheritance tax. All inherited property is exempt from state taxation.

Vermont Inheritance Tax

Vermont has no inheritance tax, but estate taxes may apply for estates exceeding $5 million.

Virginia Inheritance Tax

Virginia does not charge inheritance tax. All inheritances are free from state tax.

Washington Inheritance Tax

Washington does not impose an inheritance tax, but estates over $2.193 million are subject to state estate tax.

West Virginia Inheritance Tax

There is no inheritance tax in West Virginia. Inherited property passes without state-level taxation.

Wisconsin Inheritance Tax

Wisconsin imposes no inheritance tax. Beneficiaries are not taxed by the state.

Wyoming Inheritance Tax

Wyoming has no inheritance tax. Inheritances in the state are not subject to state tax.

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As estate laws and inheritance taxes continue to evolve, we recommend staying up to date and consulting with professionals. 

Whether you're preserving your legacy or honoring someone else's, understanding the tax landscape helps ensure that more of the wealth stays with the people and causes that matter most.

Talk to the team at Elayne if you need additional estate planning or post-loss support related to inheritance taxes. 

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