An estate tax is most commonly levied at the federal level, and it is applied to a decedent’s estate before their assets are distributed to their beneficiaries. Most estates, however, will not be subject to the federal estate tax, which applies only to estates worth $13.61 million in 2024 and $12.92 million in 2023, less any eligible donations.
Because this tax can have a major impact on your beneficiaries, you should include it in your estate planning if you believe your estate will be subject to it. Some people consult with a financial professional to optimize their estate plan for their loved ones.
The estate tax is levied by the government on estates when you die and pass on your assets to heirs. If your estate has a high enough value after you pass away, then you’ll have to pay estate taxes on anything you’re looking to bequeath. This could include cash, real estate, retirement accounts or a range of other assets.
For 2024, the federal estate tax threshold is $13.61 million for individuals, which means married couples don’t have to pay estate if their estate is worth $27.22 million or less. For 2023, the threshold is $12.92 million for individuals and $25.84 million for married couples.
Federal Estate Tax Rates
To make things simple, if someone passes away in 2024 and their estate is worth $13.61 million or less, they don’t need to worry about the federal estate tax. However, any estates worth more than that are taxed only on the amount that surpasses the $13.61 million threshold. For all but the first federal estate tax tier, you pay both a base tax charge and an additional marginal rate. Federal estate tax rates max out at 40% for amounts higher than $1 million.
Federal Estate Tax Rates
| Taxable Amount | Estate Tax Rate | What You Pay |
| $1 – $10,000 | 18% | – $0 base tax – 18% on taxable amount |
| $10,000 – $20,000 | 20% | – $1,800 base tax – 20% on taxable amount |
| $20,000 – $40,000 | 22% | – $3,800 base tax – 22% on taxable amount |
| $40,000 – $60,000 | 24% | – $8,200 base tax – 24% on taxable amount |
| $60,000 – $80,000 | 26% | – $13,000 base tax – 26% on taxable amount |
| $80,000 – $100,000 | 28% | – $18,200 base tax – 28% on taxable amount |
| $100,000 – $150,000 | 30% | – $23,800 base tax – 30% on taxable amount |
| $150,000 – $250,000 | 32% | – $38,800 base tax – 32% on taxable amount |
| $250,001 – $500,000 | 34% | – $70,800 base tax – 34% on taxable amount |
| $500,001 – $750,000 | 37% | – $155,800 base tax – 37% on taxable amount |
| $750,001 – $1 million | 39% | – $248,300 base tax – 39% on taxable amount |
| $1 million+ | 40% | – $345,800 base tax – 40% on taxable amount |
For example, let’s say your estate is valued at $14.05 million in 2024. That means your total taxable estate is $440,000, as it’s worth that much more than the $13.61 million threshold. At the appropriate tax tier, you’ll pay the base rate of $70,800, plus an additional $64,600 ($190,000 taxed at 34%). That comes out to a total estate tax of $135,400.
If you die as a resident of certain parts of the country, your estate may also be subject to a state tax. As of 2024, Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii and the District of Columbia all levy estate taxes. That means that the estates of people who live in these states may face estate taxes at both the federal and state levels.
The aforementioned states’ estate tax thresholds range from $1 million in Oregon and Massachusetts to $12.92 million in Connecticut. Rates also vary, so be sure to check your state’s website to see what you could pay.
Which States Have an Estate Tax?
Several states and the District of Columbia have an estate tax. Many have lower asset thresholds than the federal government. Each state’s exclusion amount is in the table below.
If you live in a state with an estate tax, the good news is that (generally speaking) your estate tax bill is subtracted from the value of your taxable estate before you calculate what you might owe the IRS.
Estate tax exemptions by state
| State | 2023 exemption amount | 2024 exemption amount |
|---|---|---|
| Connecticut | $12.92 million. | $13.61 million. |
| District of Columbia | $4.52 million. | $4.71 million. |
| Hawaii | $5.49 million. | $5.49 million. |
| Illinois | $4 million. | $4 million. |
| Maine | $6.41 million. | $6.8 million. |
| Maryland | $5 million. | $5 million. |
| Massachusetts | $1 million. | $2 million. |
| Minnesota | $3 million. | $3 million. |
| New York | $6.58 million. | $6.94 million. |
| Oregon | $1 million. | $1 million. |
| Rhode Island | $1.73 million. | $1.77 million. |
| Vermont | $5 million. | $5 million. |
| Washington | $2.19 million. | $2.19 million. |
A few states have an inheritance tax, which is different from an estate tax. Inheritance taxes are paid by heirs or inheritors generally upon receiving the inherited assets. An estate tax, on the other hand, is a tax levied on the entire taxable estate itself. Executors of the estate use Form 706 to figure the amount owed.
- Six states have an inheritance tax, and one collects both estate and inheritance taxes.
- Inheritance tax rates often depend on the heir’s relationship to the deceased. A surviving spouse is usually exempt from state inheritance tax. Some states tax a deceased person’s children but at a low rate. More distant relatives or heirs who aren’t related to the deceased usually face the highest inheritance tax rates.
The Estate Tax Exemption
In 2011, estates and lifetime gifts had a combined exemption of $5 million in asset value, indexed for inflation. This exemption was made permanent in 2013 and was $5.49 million for an individual or twice that for a couple for 2017.
However, the tax plan that President Trump signed in December of that year increased that exemption to $11.18 million for the tax year 2018. The exemption rose to $11.4 million for 2019, $11.58 million for 2020, $11.7 million for 2021, $12.06 million for 2022 and $12.92 million for 2023. For tax year 2024, the exemption is $13.61 million. If your estate is in the ballpark of the estate tax limits and you want to leave the maximum amount to your heirs, you’ll want to do some estate tax planning.
If you’re in charge of paying estate taxes for a deceased loved one, you might want to enlist a tax accountant and an estate lawyer to help you shoulder that burden. In addition to estate taxes, you may need to file separate income taxes for the estate if the estate is generating income above IRS limits. To file a U.S. estate tax return, you’ll need a tax ID number for the estate. An estate’s tax ID number is called an “employer identification number” or EIN. You can apply for a number online, by mail or by fax.
If you want to limit your exposure to the estate tax you might want to start giving some money away. You can make a charitable donation and deduct it at tax time, or give it to the heirs whose inheritance would otherwise take a hit from estate taxes. For 2023, every single filer or member of a married couple can give up to $17,000 as a gift, and not just to one person each. That limit applies to as many people as you want. If you give more than $17,000 to any one beneficiary, you will have to pay the federal gift tax rate, which is the same as the estate tax rate of 18% to 40%.
What Is the Estate Tax Deduction?
The estate tax deduction is the IRS’ way of preventing double taxation. Sometimes, the estate of a deceased will still generate income. This could be for a property sale that hasn’t gone through by the time the owner dies. That kind of income is known as Income in Respect of Decedent (IRD).
A large estate might face double taxation at the federal level – the regular estate tax followed by the income tax on the IRD. The estate tax deduction lets you deduct the portion of the estate tax paid for the IRD from the income tax on that IRD. This ensures that the same assets aren’t taxed twice.
Estate and Inheritance Taxes by State
The difference between estate taxes and inheritance taxes is who pays them. Estate taxes are paid by the deceased’s estate before any inheritance is issued. Inheritance taxes are paid by beneficiaries of an inheritance on the amount they receive.
For example, let’s say a family member passes away in an area with a 5% estate tax and a 10% inheritance tax, and they leave you their estate worth $1 million. Here’s how estate and inheritance taxes would work:
- The estate would pay $50,000 (5%) in estate taxes.
- You would receive $950,000.
- You would pay $95,000 (10%) in inheritance taxes.
Federal estate taxes
Federal estate taxes apply to estates worth more than $12.92 million as of 2023. Tax rates range from 18% to 40%. There is no federal inheritance tax.
Read Also: What Does the Government Use Inheritance Tax for?
The following table lists federal estate tax rates based on the taxable amount, which is the value of the estate minus the $12.92 million exclusion:
| TAXABLE VALUE OF ESTATE (TOTAL VALUE OF ESTATE MINUS $12.92M) | FEDERAL ESTATE TAX RATE |
|---|---|
| Up to $10,000 | 18% |
| Over $10,000 to $20,000 | 20% |
| Over $20,000 to $40,000 | 22% |
| Over $40,000 to $60,000 | 24% |
| Over $60,000 to $80,000 | 26% |
| Over $80,000 to $100,000 | 28% |
| Over $100,000 to $150,000 | 30% |
| Over $150,000 to $250,000 | 32% |
| Over $250,000 to $500,000 | 34% |
| Over $500,000 to $750,000 | 37% |
| Over $750,000 to $1,000,000 | 39% |
| Over $1,000,000 | 40% |
Now let’s look at the states with estate taxes, inheritance taxes, or both. Note that not all states have released their 2023 tax rates yet. We’ve included the most recent estate and inheritance tax rates that are currently available for each state.
Connecticut estate taxes
Connecticut has a flat-rate estate tax of 12% with an $11.4 million annual exclusion as of 2023. The total tax that any estate must pay is capped at $15 million.
Hawaii estate taxes
Hawaii has an estate tax on estates worth more than $5.49 million. Estate tax rates range from 10% to 20%.
Here are the Hawaii estate tax rates:
| VALUE OF ESTATE | HAWAII ESTATE TAX RATE |
|---|---|
| $0 to $1,000,000 | 10.0% |
| Over $1,000,000 to $2,000,000 | 11.0% |
| Over $2,000,000 to $3,000,000 | 12.0% |
| Over $3,000,000 to $4,000,000 | 13.0% |
| Over $4,000,000 to $5,000,000 | 14.0% |
| Over $5,000,000 to $10,000,000 | 15.7% |
| Over $10,000,000 | 20.0% |
Illinois estate taxes
Illinois has an estate tax on estates worth more than $4 million. Estate tax rates range from 0.8% to 16%.
Although Illinois exempts estates up to $4 million from estate taxes, it taxes the entire amount of estates that are worth more than that. To determine tax rates, it uses the federal credit for state death taxes table. This table has more than 20 tax rates corresponding to different amount ranges.
For example, amounts of at least $40,000 but less than $90,000 have a tax rate of 0.8% — but only if the estate is worth more than $4 million. The tax rate increases to 1.6% for amounts of at least $90,000 but less than $140,000. This pattern continues up to amounts of at least $10,040,000, which have a tax rate of 16%.
The easiest option for Illinois residents who want to figure out estate taxes is the Illinois Attorney General’s estate tax calculator.
Iowa inheritance taxes
Iowa has an inheritance tax, but, in 2021, the state decided it would repeal this tax by 2025. It has been decreasing its inheritance tax by 20% per year since 2021. For deaths that occur in or after 2025, there will be no inheritance tax.
The inheritance tax in Iowa applies to estates of $25,000 or more. Estates with lower values are exempt from inheritance tax. Iowa also exempts beneficiaries from paying inheritance tax if they’re a surviving spouse or a lineal ascendant or descendant to the deceased. Lineal ascendants and descendants include:
- Parents, grandparents, and great-grandparents
- Children, stepchildren, grandchildren, and great-grandchildren
- Descendants by adoption
For other beneficiaries of an inheritance, the inheritance tax rate depends on the individual’s relation to the deceased. Those who aren’t exempt will be in one of two groups: Tax Rate B or Tax Rate C.
Tax Rate B applies to siblings, half-siblings, sons-in-law, and daughters-in-law. Here are the rates for this group:
| VALUE OF INHERITANCE | IOWA INHERITANCE TAX RATE B (2023) |
|---|---|
| Up to $12,500 | 2.0% |
| Over $12,500 to $25,000 | 2.4% |
| Over $25,000 to $75,000 | 2.8% |
| Over $75,000 to $100,000 | 3.2% |
| Over $100,000 to $150,000 | 3.6% |
| Over $150,000 | 4.0% |
Tax Rate C applies to uncles, aunts, nieces, nephews, foster children, cousins, brothers-in-law, sisters-in-law, and all other individuals. Here are the tax rates for this group:
| VALUE OF INHERITANCE | IOWA INHERITANCE TAX RATE C (2023) |
|---|---|
| Up to $50,000 | 4.0% |
| Over $50,000 to $100,000 | 4.8% |
| Over $100,000 | 6.0% |
Kentucky inheritance taxes
Kentucky has an inheritance tax ranging from 4% to 16% that varies based on the beneficiary’s relation to the deceased. If the inheritance tax is paid within nine months of the decedent’s death, a 5% discount is allowed. There are three classes of beneficiaries in Kentucky: Class A, Class B, and Class C.
Class A is exempt from paying inheritance taxes if the date of the death was after June 30, 1998. This class is close family members, and it includes:
- Surviving spouses
- Parents
- Children and grandchildren
- Siblings and half-siblings
Class B beneficiaries receive a $1,000 inheritance tax exemption. This class is for other family members, and it includes:
- Nieces and nephews (and half-nieces and half-nephews)
- Daughters-in-law and sons-in-law
- Aunts and uncles
- Great-grandchildren
Class C beneficiaries receive a $500 tax exemption. All individuals not included in Class A or Class B, including cousins, are part of Class C.
Here are the Kentucky inheritance tax rates for Class B and Class C:
| VALUE OF INHERITANCE | KENTUCKY CLASS B INHERITANCE TAX RATE | KENTUCKY CLASS C INHERITANCE TAX RATE |
|---|---|---|
| Up to $500 | 0% | 0% |
| Over $500 to $1,000 | 0% | 6% |
| Over $1,000 to $10,000 | 4% | 6% |
| Over $10,000 to $20,000 | 5% | 8% |
| Over $20,000 to $30,000 | 6% | 10% |
| Over $30,000 to $45,000 | 8% | 12% |
| Over $45,000 to $60,000 | 10% | 14% |
| Over $60,000 to $100,000 | 12% | 16% |
| Over $100,000 to $200,000 | 14% | 16% |
| Over $200,000 | 16% | 16% |
Maine estate taxes
Maine has an estate tax ranging from 8% to 12%. It offers an annual exclusion amount of $6.41 million for deaths in 2023.
Here are Maine’s current estate taxes:
| VALUE OF ESTATE | MAINE ESTATE TAX RATE (2023) |
|---|---|
| Up to $6,410,000 | 0% |
| Over $6,410,000 to $9,410,000 | 8% |
| Over $9,410,000 to $12,410,000 | 10% |
| Over $12,410,000 | 12% |
Maryland estate and inheritance taxes
Maryland is the only state that has an estate tax and an inheritance tax.
The Maryland estate tax is 16% on estates worth more than $5 million. Its inheritance tax is 10% for those dying on or after July 1, 2000. However, beneficiaries with any of the following relationships to the deceased are exempt from paying the Maryland inheritance tax:
- Children or other lineal descendants
- Spouses of children or other lineal descendants
- Spouses
- Parents and grandparents
- Stepchildren and stepparents
- Siblings
When estate and inheritance taxes apply, the amount of the estate tax is reduced by the amount of the inheritance tax.
Massachusetts estate taxes
Massachusetts has an estate tax on estates worth more than $1 million. Estate tax rates range from 0.8% to 16%. Like Illinois, Massachusetts uses the federal credit for state death taxes table to determine estate tax rates. It taxes the entire amount of the estate in excess of that $1 million threshold.
The federal credit for state death taxes table has a tax rate of 0% for the first $40,000. A tax rate of 0.8% applies on amounts of at least $40,000 but less than $90,000, and tax rates increase sequentially from there.
The full table of Massachusetts estate tax rates is available in the state’s guide to estate taxes.
Minnesota estate taxes
Minnesota has an estate tax ranging from 13% to 16%. Estate taxes apply to estates worth more than $3 million as of 2022.
Here are Minnesota’s estate tax rates:
| VALUE OF ESTATE | MINNESOTA ESTATE TAX RATE (2022) |
|---|---|
| Up to $3,000,000 | 0.0% |
| Over $3,000,000 to $10,100,000 | 13.0% |
| Over $10,100,000 to $11,100,000 | 13.6% |
| Over $11,100,000 to $12,100,000 | 14.4% |
| Over $12,100,000 to $13,100,000 | 15.2% |
| Over $13,100,000 | 16.0% |
Nebraska inheritance taxes
Nebraska has an inheritance tax ranging from 1% to 15%. The tax rate and exemption amount depend on the beneficiary’s relationship to the decedent. Surviving spouses don’t need to pay inheritance tax in Nebraska.
Here are Nebraska’s inheritance tax rates and exemption amounts:
| RELATION TO DECEASED | NEBRASKA INHERITANCE TAX RATE | EXEMPTION AMOUNT |
|---|---|---|
| Immediate relatives | 1% | $100,000 |
| Remote relatives | 11% | $40,000 |
| All other beneficiaries | 15% | $25,000 |
For inheritance tax purposes, Nebraska considers the following relations to be immediate relatives:
- Children, adopted children, grandchildren, and other lineal descendants
- Siblings
- Parents and grandparents
- Spouses of any of the immediate relatives listed above
- Relatives of the decedent’s former spouse, if the decedent was married to the former spouse at the time of the former spouse’s death
Nebraska considers the following relations to be remote relatives:
- Nieces and nephews
- Aunts and uncles
- Lineal descendants or spouses of the remote relatives listed above
Washington estate taxes
Washington has an estate tax ranging from 10% to 20%. The estate tax exclusion is $2,193,000.
Here are Washington’s estate tax rates:
| VALUE OF ESTATE | WASHINGTON ESTATE TAX RATE (2023) |
|---|---|
| Up to $2,193,000 | 0.0% |
| Over $2,193,000 to $3,193,000 | 10.0% |
| Over $3,193,000 to $4,193,000 | 14.0% |
| Over $4,193,000 to $5,193,000 | 15.0% |
| Over $5,193,000 to $6,193,000 | 16.0% |
| Over $6,193,000 to $8,193,000 | 18.0% |
| Over $8,193,000 to $9,193,000 | 19.0% |
| Over $9,193,000 to $11,193,000 | 19.5% |
| Over $11,193,000 | 20.0% |
Washington, D.C., estate taxes
Washington, D.C., has an estate tax ranging from 11.2% to 16.0%. The estate tax exclusion is $4,254,800 as of 2022 and increases annually based on a cost of living adjustment.
