You may have to pay an inheritance tax if you received money or property from someone who passed away — but it’s only required in a handful of states.
Here’s what you need to know about the tax, including when you’ll pay it and how much you might owe.
An inheritance tax is a state tax paid by a person who inherits money.
As of 2025, if the person who left the money lived in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, the beneficiary — the person receiving the money or asset — might need to pay an inheritance tax to that state’s department of revenue. (Note that Iowa had an inheritance tax that expired on Dec. 31, 2024.)
Where the beneficiary lives doesn’t matter. The inheritance tax is triggered by where the deceased person lived and their date of death. That means a nonresident of a state might have to pay that state’s tax.
The amount of the tax and the threshold for having to pay depends on the amount of the inheritance.
Rates are progressive, meaning the bigger the assets, the higher the rate. Rates are based on the fair market value of the assets.
Although they are both types of death taxes, inheritance taxes and estate taxes are not the same thing. Both are levied at the time of death, but the person who inherits the assets pays an inheritance tax, while the estate of the deceased pays an estate tax.
Connecticut, Washington, D.C., Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Washington, and Vermont have estate taxes.
Only Maryland has both an inheritance and an estate tax.
There is also a federal estate tax that the deceased must pay if they surpass the filing threshold, which is $13.9 million for 2025 and $15 million for 2026.
Tax season resources: Everything you need to know to file on time
Whether you will pay an inheritance tax depends on where the person who died resided, how much they left you, and your relationship to them.
If the decedent lived in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, you might face an inheritance tax bill to that state, even if you don’t live there.
Say you live in Florida. If someone died in Nebraska and left you money, real estate, or personal property, you might need to file a tax return to Nebraska and make a tax payment.
But it’s important to note that the closer relation you are to the deceased, the less likely you are to face tax liability for money you inherit.
For example, surviving spouses, parents, children, and grandchildren may be exempt from paying inheritance taxes, while siblings, nieces, or nephews might need to pay. But those rules vary by state. In some states, only a surviving spouse is exempt.
There are thresholds, which vary by state, for the amounts of money that trigger an inheritance tax. The higher the value of the bequest, the higher the tax rate.
For example, in New Jersey, the first $25,000 of an inheritance is exempt for certain beneficiaries, but then an 11% tax kicks in for the amount between $25,001 and $1,075,000. That percentage increases to 13% for values between $1,075,001 and $1,375,000. The highest percentage, 16%, kicks in at inheritances valued at over $1,700.000
Here are the states that have an inheritance tax, who is exempt from paying, who is partially exempt from payment, and the point where the tax kicks in.
Keep in mind, if someone has to pay an inheritance tax, it is on the value that is above the threshold. For example, a sibling of someone who died in New Jersey and was left $50,000 would have to pay $2,750 in taxes because there is no tax on the first $25,000 and the tax rate is 11% on the additional $25,000.
No. In all of the states that have an inheritance tax, spouses are exempt.
No. The inheritance tax is based on where the deceased person lived, not where the person who received the inheritance lives.
Moving to another state without an inheritance tax would save your heirs from ever having to pay inheritance taxes. But that’s not always practical.
If you live in a state with an inheritance tax, you might be able to gift some assets while you are still alive. In 2025, the IRS allows parents to give a person, like a child, $19,000 tax-free.
You could also buy a life insurance policy with the beneficiary receiving a death benefit, which is generally not taxable.
Talking to an estate planning professional can help you.
You might have to pay taxes on money received from the sale of inherited property if you sell it at a profit. If you inherit property and hold on to it, there’s no capital gains tax.
Whether you pay and the amount you pay depends on the property’s fair market value when the person who gave it to you died.
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