States With No Estate Tax 2022

An estate tax is a tax on your estates, or everything comprising your net worth, after you pass. Estate tax accounts for everything you own or have certain interests in at the date of your death by using the fair market value of each item, rather than what the deceased paid for the assets. Your property may include cash, real estate, insurance, trusts, business assets, annuities, financial securities, and other assets.

The value must exceed an exclusion limit set by law and only the amount that exceeds that threshold is subject to estate tax. The estate tax does not apply to assets that will be transferred to a surviving spouse, but when that spouse who inherited the estate dies, the beneficiaries may be subject to the tax.

It is important to note that an estate tax is applied to an estate before the assets are given to beneficiaries. An inheritance tax applies to assets after they have been inherited and are paid by the inheritor. There is no federal inheritance tax. As of 2019, Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania have their own inheritance tax. Inheritance tax is only applied if the amount is above each state’s threshold and is assessed on the amount that exceeds that threshold. Inheritance tax rates typically begin in the single digits and rise to a max of anywhere between 15% and 19%.

There are both federal estate taxes and state estate taxes. The Internal Revenue Service (IRS) requires estates to exceed $11.4 million to file a federal estate tax return and pay estate tax. Because the tax being assessed is only on the portion of the estate that exceeds the exclusion limit, the effective U.S. estate tax rate is substantially lower than the top federal rate of 40% in many instances.

An estate that is not subject to the federal estate tax may still be subject to state estate taxes. This is because state exemptions are significantly lower than the federal exclusion. All exemptions are less than half of the federal. However, estates valued at less than $1,000,000 are not taxed in any jurisdiction.

Estate tax rates are typically assessed in brackets after the exemption threshold, like income tax is assessed. The tax rate, as of 2019, typically starts at 10% and then increases in steps up to about 16%. Tax rates can be above and below these numbers. The estate tax rates in Connecticut are the lowest, starting at 7.80% and rises to 12%. The rates are the highest in Washington, where they go as high as 19%.

The following are the 13 states that levy state estate tax and their threshold minimums: Connecticut ($3,600,000), District of Columbia ($5,600,000), Hawaii ($5,500,000), Illinois ($4,000,000), Maine ($5,600,000), Maryland ($5,000,000), Massachusetts ($1,000,000), Minnesota ($2,700,000), New York ($5,000,000), Oregon ($1,000,000), Rhode Island ($1,561,719), Vermont ($2,750,000), and Washington 9$2,193,000).

The states with no state estate tax as of January 1, 2020, are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.

States With No Estate Tax 2022

State Estate Tax? Estate Tax Threshold 2022 Pop.
Alabama5,073,187
Alaska738,023
Arizona7,303,398
Arkansas3,030,646
California39,995,077
Colorado5,922,618
Connecticut36000003,612,314
Delaware1,008,350
Florida22,085,563
Georgia10,916,760
Hawaii55000001,474,265
Idaho1,893,410
Illinois400000012,808,884
Indiana6,845,874
Iowa3,219,171
Kansas2,954,832
Kentucky4,539,130
Louisiana4,682,633
Maine56000001,369,159
Maryland50000006,257,958
Massachusetts10000007,126,375
Michigan10,116,069
Minnesota27000005,787,008
Mississippi2,960,075
Missouri6,188,111
Montana1,103,187
Nebraska1,988,536
Nevada3,185,426
New Hampshire1,389,741
New Jersey9,388,414
New Mexico2,129,190
New York500000020,365,879
North Carolina10,620,168
North Dakota800,394
Ohio11,852,036
Oklahoma4,000,953
Oregon10000004,318,492
Pennsylvania13,062,764
Rhode Island15617191,106,341
South Carolina5,217,037
South Dakota901,165
Tennessee7,023,788
Texas29,945,493
Utah3,373,162
Vermont2750000646,545
Virginia8,757,467
Washington21930007,901,429
West Virginia1,781,860
Wisconsin5,935,064
Wyoming579,495

States With No Estate Tax 2022