The states with no state estate tax as of mid-2023, are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, ...
State estate or inheritance taxes are much lower, but they're still significant when tacked on to the high federal rates. The highest state tax rates can be found in Washington and Hawaii — each reach 20%. Other states have estate and inheritance taxes ranging from 10% to 16%.
The tax is paid by the estate itself before assets are distributed to heirs. , with a top rate of 40 percent, 12 states and the District of Columbia impose additional estate taxes, while six states levy inheritance taxes. Maryland is the only state that imposes both an estate and an inheritance tax.
Many people worry about the estate tax affecting the inheritance they pass along to their children, but it's not a reality most people will face. In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate.
Making a will to distribute your assets
Whether leaving assets to a spouse or civil partner, distributing assets to take advantage of tax-free allowances, or making gifts to charity, a valid will could help you to reduce or avoid Inheritance Tax altogether.
If you are expecting an inheritance from parents or other family members, suggest they set up a trust to deal with their assets. A trust allows you to pass assets to beneficiaries after your death without having to go through probate.
An estate tax is levied on the estate of the deceased while an inheritance tax is levied on the heirs of the deceased. Only 17 states and the District of Columbia currently levy an estate or inheritance tax.
States without income tax
The nine states that do not levy a state income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
While there is no state in the U.S. that doesn't have property taxes on real estate, some have much lower property tax rates than others. Here's how property taxes are calculated. The effective property tax rate is used to determine the places with the lowest and highest property taxes in the nation.
Holding life insurance policies via trusts to save on taxes and protect heirs from lawsuits. Rich founders with illiquid assets can take out life insurance policies to cover their estate taxes. They get the most bang for their buck if they put the life insurance policy inside a trust rather than owning it directly.
If everyone agrees, you could sell or rent out the house together, as business partners. If the rental market is strong, or if you're inheriting a house that is paid off, it might make sense to lease the house to a reliable tenant. But consider the time and money required to own and operate a rental property.
One type of trust that helps protect assets is an intentionally defective grantor trust (IDGT). Any assets or funds put into an IDGT aren't taxable to the grantor (owner) for gift, estate, generation-skipping transfer tax, or trust purposes.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
If you inherited a house then there is no tax on the actual inheritance, however the value of the house on the day you inherited it will be the base cost for Capital Gains Tax purposes. When you eventually dispose of this property, it will be subject to Capital Gains Tax. Last Updated: 26/02/2021.
Currently Estate Duty is levied at the rate of 20% on the net asset value in an estate that exceeds R3. 5 million, with an estate where the said net asset value exceeds R30 million, being liable for 25% estate duty on the balance exceeding R30 million (applicable from 1 March 2018).
If your home is valued at the allowed price or less, you may gift it to your children. As a rule, if you are gifting property valued at more than $14,000 in any one year, you must file a gift tax form, unless the recipient is your spouse. Keep in mind, this price applies to individuals.
Parents can make an outright gift of a home to an adult child. Any gift that exceeds the 2024 annual exclusion of $18,000 will be subject to gift tax and require that a gift tax return be filed.
Estate Tax Thresholds
You can inherit up to $12.92 million in 2023 without paying federal estate taxes due to the estate tax exemption. However, some states have their own inheritance taxes, so you may still owe taxes to your state. Any estate exceeding the above thresholds could be taxed up to 40%.
The 7 year rule
No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
Gift and loan trusts
A useful way to create some flexibility is to use a 'gift and loan trust'. On death, the value of any loan outstanding falls into your estate. However, the value of any trust investment made and the growth on it will generally fall outside your estate for IHT purposes.