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.
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.”
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!
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
Identify clients in high-risk states
Flag their net worth near state/federal thresholds
Discuss legacy priorities (e.g., keeping a home or business in the family)
Plan to use targeted tools—and stay tuned for Part 2
🏡 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
Subscribe for Part 2:
“How to Pay the Death Tax Without Selling the Farm”—coming soon!