When Is an Estate Subject to State Death Taxes?

The United States imposes a federal estate tax at death, which is based on the total value of the deceased person’s estate (everything a person owns at the time of their death) and is paid from the estate itself. In addition to the federal estate tax, some states assess their own state death tax. One is a state-level estate tax, which functions similarly to the federal estate tax. In addition, a handful of states have an inheritance tax, which is assessed on the person receiving the inheritance rather than on the estate.

State-level estate and inheritance taxes (often referred to collectively as death taxes) can significantly impact how much ultimately passes to a person’s loved ones, making it essential to understand state death tax rules when creating a comprehensive estate plan.

Which States Collect a Death Tax?

As of 2025, the following jurisdictions have an estate tax: Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. The following states have an inheritance tax: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Maryland is the only state that has both an estate tax and an inheritance tax.

These laws change over time, so consult with a qualified professional to ensure that you have the most up-to-date information.

Each of these states has its own laws governing how much of an estate is exempt from taxation, what deductions can be taken, and what tax rates apply. Regardless of these variations, an estate is generally subject to a state death tax only if the deceased person either lived in that state or owned real estate or tangible personal property located in the state at their death.

State Death Tax Examples

The following examples illustrate when an estate or an inheritor may be subject to a state death tax.

1. Deceased person resided in New York. Imagine you have an uncle who passed away and left you his entire estate. If he lived in New York at the time of his death, could the estate be subject to a state death tax in addition to federal estate taxes? Yes; your uncle’s estate may be subject to a state-level estate tax because New York imposes its own estate tax in addition to the federal estate tax. However, whether your uncle’s estate will owe New York estate taxes depends on the total value of his estate and the deductions and exemptions available to him under New York’s tax rules.

Would you, as the inheritor, be subject to an inheritance tax? No, because New York does not impose an inheritance tax.

• Deceased person lived in Florida. On the other hand, if your uncle lived in Florida at the time of his death and owned no property in New York (or any other state that imposes an estate tax), his estate would not be subject to any state-level estate tax because Florida has no estate tax. However, your uncle’s estate may still be subject to federal estate taxes, as those apply regardless of where a person lives or owns property.

You, as the inheritor, would not be subject to an inheritance tax because Florida does not impose one.

• Deceased person resided in Florida; you, the inheritor, live in New York. What if you live in New York and inherit your uncle’s estate? He lived in Florida at the time of his death and owned no property outside Florida. In this situation, your uncle’s estate would not be subject to state-level estate tax because Florida, where he lived and owned property, has no estate tax. He was not a New York resident and did not own any property there, so his estate would have no New York estate tax exposure, even though you, the inheritor, live in New York.

Likewise, you would not owe any inheritance tax, as neither Florida nor New York imposes one.

• Deceased person was a Florida resident and owned property in New York; you, the inheritor, are a New York resident. But what if your uncle, a Florida resident at the time of his death, owned a second home in New York? In this case, his estate may be subject to New York death taxes—but only on the value of his New York property—even though he was a Florida resident at the time of his death.

You would not owe any state inheritance tax, as neither Florida nor New York imposes one.

• Deceased person lived in Kentucky; you, the inheritor, reside in Florida. What if you live in Florida, your aunt lived in Kentucky at the time of her death, and you inherit her estate? Because Kentucky does not impose an estate tax, your aunt’s estate would not owe any state-level estate tax.
  
  However, Kentucky does have an inheritance tax, meaning that you, as the inheritor, would be subject to an inheritance tax based on the value of what you inherited (if over the applicable exemption allowed in Kentucky) even though you live in Florida, a state that does not impose an inheritance tax.
  
  
• Note for snowbirds. John lives in Connecticut for six months of the year and in Florida for the other six. His official residence is in Connecticut. Because a person’s state of residence determines which state’s estate tax laws apply, Connecticut will treat John as a resident for estate tax purposes. Therefore, when John passes away, his entire estate, no matter where his assets are located, will be subject to Connecticut’s estate tax. Even his Florida home, though located in a state without an estate tax, would be included in Connecticut’s taxable estate calculation because it is considered part of his overall estate as a Connecticut resident.

As the above examples show, state death taxes are tricky and may apply in unexpected ways. If you live or own property in Maryland or the District of Columbia, and are concerned about what impact the state estate or inheritance tax may have on your estate plan, call Andre O. McDonald, a knowledgeable Howard County, Montgomery County and District of Columbia estate planning, special-needs planning and Medicaid planning attorney at (443) 741-1088; (301) 941-7809 or (202) 640-2133; or use the following link: https://www.mcdonaldesq.com/#contactWrapper to schedule a consultation to discuss how we may reduce the impact of state estate or inheritance tax on your estate plan.

DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL, INSURANCE OR TAX ADVICE.