Inheritance Tax: The Federal Estate Tax vs. State Inheritance Taxes

“The executor of a decedent’s estate uses Form 706 to figure the estate tax imposed by chapter 11 of the Internal Revenue Code. This tax is levied on the entire taxable estate and not just on the share received by a particular beneficiary.”

“The Estate Tax is a tax on your right to transfer property at your death.”

“For decedents who died in 2026, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident: | 1. Whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $15,000,000; or | 2. Whose executor elects to transfer the deceased spousal unused exclusion (DSUE) amount to the surviving spouse, regardless of the size of the decedent’s gross estate. See the instructions for Part VI—Portability of Deceased Spousal Unused Exclusion (DSUE), later, and sections 2010(c)(4) and (c)(5).”

“In most cases, property you receive as a gift, bequest, or inheritance isn’t included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.”

“If you inherited a pension or an IRA, you may have to include part of the inherited amount in your income. See Survivors and Beneficiaries in Pub. 575 if you inherited a pension. See What if You Inherit an IRA? in Pubs. 590-A and 590-B if you inherited an IRA.”

“To determine if the sale of inherited property is taxable, you must first determine your basis in the property. […] If you sell the property for more than your basis, you have a taxable gain.”

“Inheritance tax is imposed as a percentage of the value of a decedent's estate transferred to beneficiaries by will, heirs by intestacy and transferees by operation of law. The tax rate varies depending on the relationship of the heir to the decedent.”

“The rates for Pennsylvania inheritance tax are as follows: | 0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger; | 4.5 percent on transfers to direct descendants and lineal heirs; | 12 percent on transfers to siblings; and | 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax. | Property owned jointly between spouses is exempt from inheritance tax.”

“Effective for estates of decedents dying after June 30, 2012, certain farm land and other agricultural property are exempt from Pennsylvania inheritance tax, provided the property is transferred to eligible recipients.”

“Effective for estates of decedents dying on or after September 6, 2022, personal property that is transferred from the estate of a serving military member who has died as a result of an injury or illness received while on active duty in the armed forces, a reserve component or the National Guard, is exempt from inheritance tax.”

“New Jersey imposes an Inheritance Tax on the transfer of assets from a deceased person (decedent) to someone else (beneficiary).”

“Rates depend on the amount received and the relationship between the decedent and the beneficiary or transferee.”

“New Jersey Estate Tax is no longer imposed for individuals who died on or after January 1, 2018.”

“The inheritance tax is a tax on a beneficiary’s right to receive property from a deceased person. The amount of the inheritance tax depends on the relationship of the beneficiary to the deceased person and the value of the property. Generally, the closer the relationship the greater the exemption and the smaller the tax rate. All property belonging to a resident of Kentucky is subject to the tax except for real estate located in another state. Also, real estate and personal property located in Kentucky and owned by a nonresident is subject to being taxed. If the inheritance tax is paid within nine months of date of decedent’s death, a 5 percent discount is allowed. The tax due should be paid when the return is filed. However, if the beneficiary’s net inheritance tax liability exceeds $5,000 and the return is filed timely, an election can be made to pay the tax in 10 equal annual installments. The first installment is due at the time the return is filed. The portion of the tax deferred is charged with interest at the rate established by law beginning 18 months after the date of death.”

“Class A beneficiaries include: | surviving spouse, parent, child, grandchild, brother, sister, half-brother, and half-sister | If the date of death is after June 30, 1998, all Class A beneficiaries are exempt from paying Kentucky inheritance tax.”

“Class B beneficiaries include: | niece, nephew, half-niece, half-nephew, daughter-in-law, son-in-law, aunt, uncle, great-grandchild | Note: nieces and nephews by marriage and great-nieces and great-nephews are Class C beneficiaries. | Class B beneficiaries receive a $1,000 exemption and the tax rate is 4 percent to 16 percent. See tax chart on page 6.”

“Class C beneficiaries include all persons not included in Class A or Class B. Cousins are considered Class C beneficiaries. Class C beneficiaries receive a $500 exemption and the tax rate is 6 percent to 16 percent. See tax chart page 6.”

“There is no Kentucky estate tax.”

“The inheritance tax is a tax imposed on the privilege of receiving property from a decedent.”

“For decedents dying on or after July 1, 2000, direct or lineal heirs are exempt from inheritance tax. This includes a spouse, child, grandchild, great-grandchild, stepchild, parent, or grandparent.”

“Collateral heirs are subject to inheritance tax. This includes a niece, nephew, aunt, uncle, or cousin. | TIME FRAME | TAX RATE | 6/1/75 to Current | 10% | 1935 to 6/1/75 | 7½% | 1908 to 1935 | 5% | 1874 to 1908 | 2½% | TIME FRAME | TAX RATE FOR SIBLINGS ONLY | 7/1/2000 to Current | NO TAX DUE | 7/1/99 to 6/30/00 | 8% | NOTE: For decedents dying on or after July 1, 2000, a decedent’s sibling and the spouse of a decedent’s child are exempt from inheritance tax.”

“Friends and other individuals not related by blood to the decedent are subject to inheritance tax at the same rate as collateral heirs. Exceptions include individuals named above, including a spouse, registered domestic partner, domestic partner (limited exemption for real property), a spouse of a child, or a stepchild.”

“Property passing to any one person not exceeding a total of $1,000.”

“Any organization that is exempt from taxation under §501(c)(3) of the Internal Revenue Code is exempt from inheritance tax. Proof of an organization’s tax-exempt status may be required by the Register of Wills in order to qualify.”

“If the decedent died with a Last Will and Testament, the tax on the receipt of property by a legatee (those named to inherit in a Last Will and Testament) is paid either by the estate of the decedent or by the legatee. Most wills include a provision known as a “tax clause” which provides that any end-of-life taxes, like the inheritance tax, be paid from the estate rather than be paid by the legatee. If the decedent died without a Last Will and Testament, the tax on receipt of property by an heir is paid by the inheriting heir.”

“Nebraska law requires the personal representative of an estate to submit a report to the county treasurer of the county in which the estate was administered, summarizing inheritance taxes by class of beneficiary upon the distribution of any proceeds from an estate. Neb. Rev. Stat. § 77-2015.”

“Class 1 Beneficiaries, Immediate Relatives and Siblings are: Parents, grandparents, siblings, children (including legally adopted children), lineal descendants, and spouse or surviving spouse of any of these receiving property that was subject to tax under Neb. Rev. Stat. § 77-2004.”

“Class 2 Beneficiaries, Remote relatives are: Uncles and aunts, nephews and nieces, or lineal relatives of such relatives and spouse or surviving spouse of any of these receiving property that was subject to tax under Neb. Rev. Stat. § 77-2005.”

“(1) In the case of a person described in subsection (2) of this section, the rate of tax shall be: | (a) For decedents dying prior to January 1, 2023, one percent of the clear market value of the property received by each person in excess of forty thousand dollars; and | (b) For decedents dying on or after January 1, 2023, one percent of the clear market value of the property received by each person in excess of one hundred thousand dollars.”

“(3) Any interest in property, including any interest acquired in the manner set forth in section 77-2002, which may be valued at a sum less than or equal to the applicable exempt amount under subsection (1) of this section shall not be subject to tax. In addition, the homestead allowance, exempt property, and family maintenance allowance shall not be subject to tax. Interests passing to the surviving spouse by will, in the manner set forth in section 77-2002, or in any other manner shall not be subject to tax. Any interest passing to a person described in subsection (2) of this section who is under twenty-two years of age shall not be subject to tax.”

“(1) In the case of an uncle, aunt, niece, or nephew related to the deceased by blood or legal adoption, or other lineal descendant of the same, or the spouse or surviving spouse of any of such persons, the rate of tax shall be: | (a) For decedents dying prior to January 1, 2023, thirteen percent of the clear market value of the property received by each person in excess of fifteen thousand dollars; and | (b) For decedents dying on or after January 1, 2023, eleven percent of the clear market value of the property received by each person in excess of forty thousand dollars.”

“(2) If the clear market value of the beneficial interest is less than or equal to the applicable exempt amount under subsection (1) of this section, it shall not be subject to tax. In addition, any interest passing to a person described in subsection (1) of this section who is under twenty-two years of age shall not be subject to tax.”

“(1) In all other cases the rate of tax shall be: | (a) For decedents dying prior to January 1, 2023, eighteen percent of the clear market value of the beneficial interests received by each person in excess of ten thousand dollars; and | (b) For decedents dying on or after January 1, 2023, fifteen percent of the clear market value of the beneficial interests received by each person in excess of twenty-five thousand dollars.”

“(2) If the clear market value of the beneficial interest is less than or equal to the applicable exempt amount under subsection (1) of this section, it shall not be subject to any tax. In addition, any interest passing to a person who is under twenty-two years of age shall not be subject to tax.”

“Iowa inheritance tax is not applicable for deaths occurring on or after 1/1/25.”

“Inheritance tax is a tax on the share going to a beneficiary, and it is the beneficiary who is responsible for payment of the tax. However, it is the duty of the personal representative to see that the tax is collected and paid.”

“Washington does not have an inheritance tax. Washington does have an estate tax.”

“In general terms, an inheritance tax is a tax on the beneficiaries of an estate whereas an estate tax is a tax on the decedent’s estate.”

“If you are a person living in Washington who inherits property or money, you do not owe Washington taxes on your inheritance.”