Inheritance taxes in the United States are taxes imposed on the transfer of property from a deceased person to their heirs. Inheritance taxes are also known as estate taxes.
In the United States, inheritance taxes are imposed by some states and at the federal level. However, the federal estate tax has a high exemption amount, which means that only a small percentage of estates are subject to the federal estate tax. The federal estate tax exemption for 2021 is $11.7 million per person, which means that estates valued at less than $11.7 million are not subject to the federal estate tax. The exemption is set to drop to $5 million in 2026.
Currently, only a few states in the U.S. have their own estate or inheritance taxes, which include:
- Connecticut
- Hawaii
- Illinois
- Kentucky
- Maine
- Maryland
- Massachusetts
- Minnesota
- New York
- Oregon
- Rhode Island
- Vermont
- Washington D.C
The threshold, rates, and exemptions for state inheritance taxes vary, so it’s important to check the specific laws of the state where the deceased person lived or owned property.
It’s important to note that, estate planning is important to minimize the tax burden and to ensure that your assets are distributed according to your wishes, it’s always a good idea to consult with a tax professional or a lawyer to ensure that you understand and comply with all relevant laws and regulations.