This article includes a list of states that have an inheritance tax. To view the list, see below. Why should you be concerned about state inheritances taxes when making your estate plan? Several economists have predicted that during the next few decades we will witness the largest wealth transfer in history. While much of that transfer is expected to be the result of inheritances received by Baby Boomers from their parents, many Baby Boomers will also pass their wealth to their children during this time. The amount of money and property Baby Boomers are projected to inherit on average is substantial. If you are an heir to this type of estate, the issue of inheritance tax could suddenly become important to you, even if you never considered it before.
Of course, even if your parents or other relatives have the opportunity to leave their property to you when they pass on, there is no guarantee they will. Many senior citizens are drafting estate plans designed to fund their favorite charitable causes or create endowments at universities. The rising cost of health care and longterm care will wipe out many estates, forcing seniors to rely on Medicaid and help from their children. Nevertheless, for many families, the issue of inheritance tax will become an important concern. For those living in states where taxes are high, such as New Jersey, Pennsylvania, and Maryland, inheritance taxes threaten to take away even more of what previous generations have worked hard to accumulate.
When making a will or living trust, most people focus on estate taxes. However, if you reside in a state that also levies an inheritance tax, there are estate planning strategies that can ensure more of your assets are passed to your beneficiaries rather than the government. Consult an estate planning attorney or tax advisor about the inheritance tax laws in your state for more information.For more information on how to structure your estate plan with federal and state taxes in mind, see
other types of trusts.
States With An Inheritance Tax
The following states have an inheritance tax as of January 1, 2015:
Tennessee - to be phased out in 2016. Tennessee's inheritance tax was repealed effective January 1, 2016.
Many states are currently considering changes to state tax structures to discourage residents from moving to states where the tax burden is lower and they can leave more to their heirs and beneficiaries.
States With No Inheritance Tax
The following states do not impose an inheritance tax as of January 1, 2015:
Also, the District of Columbia does not have an inheritance tax as of January 1, 2015.
Note, this article only addresses inheritance taxes. It does not address estate taxes. Several states impose a state estate tax, but do not impose an inheritance tax. A few states impose both an inheritance tax and an estate tax.
Tax laws change frequently. Consult your advisor for the most up to date information.