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Where Not to Die in 2025: The States That Still Punish Legacy

Picture of Eric Estrada

We’ve all heard “nothing is certain but death and taxes”—but for residents of certain states, the combination can cost dearly. While most states have dropped estate or inheritance taxes, 17 states plus DC still impose them. And with the federal estate tax exemption set to expire in 2026, even moderate estates may be vulnerable.

⚠️ The 2025 Death Tax Map: Where Not to Die

Here’s a breakdown of states with lingering inheritance or estate taxes—and why they matter:

State Estate Tax? Inheritance Tax? Top Rate Exemption
CT ✅ Yes ❌ 12 % $13.85 M
DC ✅ Yes ❌ 16 % $4.71 M
HI ✅ Yes ❌ 20 % $5.49 M
IL ✅ Yes ❌ 16 % $4 M
IA ❌ (phasing) ✅ (until 2025) 6–12 % N/A
KY ❌ ✅ 4–16 % Varies
MA ✅ Yes ❌ 16 % $2 M
MD ✅ Yes ✅ 16 % $5 M
ME ✅ Yes ❌ 12 % $6.41 M
MN ✅ Yes ❌ 16 % $3 M
NE ❌ ✅ 1–15 % Varies
NJ ❌ ✅ 11–16 % Varies
NY ✅ Yes ❌ 16 % ~$6.94 M
OR ✅ Yes ❌ 16 % $1 M
PA ❌ ✅ 4.5–15 % Varies
RI ✅ Yes ❌ 16 % ~$1.77 M
VT ✅ Yes ❌ 16 % $5 M
WA ✅ Yes ❌ 20 % $2.19 M

🧠 Advisor Tip:
“Most clients are surprised to learn that where they live—or plan to retire—can force their heirs to pay massive taxes, often on assets they thought were safe.”

💣 Federal Time Bomb: 2026 Sunset

  • 2025 Exemption: $13.99 M per individual (≈$27.98 M per couple)

  • 2026 Sunset: Scheduled to cut exemption in half (~$7 M)

  • Tax Rate: Flat 40% on estates over the exemption

Example: A $10 M estate in 2025 is safe—but in 2026, it could incur a 40% tax on $3 M = ~$1.2 M!

🛑 Who’s Really at Risk?

  • Business owners with succession plans

  • Families owning high-value real estate

  • IRA-heavy or blended-asset portfolios

  • Retirees in states like NY, MA, OR, WA, DC, MN, IL

  • Couples jointly holding assets over $5–6 M

🧰 What You Can Do Now

  1. Identify clients in high-risk states

  2. Flag their net worth near state/federal thresholds

  3. Discuss legacy priorities (e.g., keeping a home or business in the family)

  4. Plan to use targeted tools—and stay tuned for Part 2

✅ Advisor Takeaways

  • 🏡 Ask clients where they plan to retire—or be buried

  • 📊 Review current portfolio mix and beneficiary arrangements

  • 💬 Frame the conversation: “Protecting the family, not the taxes”

  • 🤝 Use this post to start the dialogue, then let us support you with customized strategies

🔗 CTA

Subscribe for Part 2:
“How to Pay the Death Tax Without Selling the Farm”—coming soon!
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