16 States With Estate or Inheritance Taxes

Aaron Meshon Facebook Twitter LinkedIn

Let’s start with the good news: Most people don’t get hit with federal estate taxes.

For 2025, the first $13.99 million of an estate’s value is exempt from the federal estate tax. Since the vast majority of estates aren’t worth that much, relatively few estates are subject

to this tax.

The not-so-good news: Even if the federal estate tax doesn’t apply, your estate — or your heirs — still might be taxed by your state (or the District of Columbia).

Twelve states and the District of Columbia have their own estate tax. In most cases, their exemption amount is less than the federal exemption. That means state-level estate taxes might

apply even if the federal tax doesn’t. (The lower the exemption, the more likely that an estate will be taxed.)

There are also five states that impose an inheritance tax. These taxes are levied on property inherited by heirs, but close relatives are often exempt from state inheritance taxes or pay a

lower rate than other heirs.

Let’s take a look at the states that impose estate or inheritance taxes — and the one state that has both.

Connecticut imposes an estate tax with a flat rate of 12 percent. However, the tax only applies if a taxable estate’s value is greater than the federal estate tax exemption for the deceased

person’s year of death — which, again, is $13.99 million for 2025 (up from $13.61 million for 2024).

It’s the only state that adopts the federal exemption amount, which gives Connecticut the highest state estate tax exemption in the country.

Connecticut is also the only state with a gift tax. The combined total of the state’s estate and gift taxes is capped at $15 million.

For 2025, the District of Columbia’s estate tax exemption is $4,873,200 (up from $4,715,600 for 2024). That’s about average for state exemption amounts — it’s the seventh highest in the

nation.

The estate tax rates in the District of Columbia range from 11.2 percent to 16 percent, depending on the value of the taxable estate.

Hawai‘i’s estate tax applies to taxable estates worth more than $5.49 million. The state’s estate tax exemption isn’t adjusted for inflation each year, but it’s still the fourth-highest

state exemption in the nation (including the District of Columbia).

The state’s estate tax rates range from 10 percent to 20 percent, depending on the value of the taxable estate. Hawai‘i’s top estate tax rate is tied with Washington’s rate for the highest

in the country.

The Illinois estate tax comes into play when the value of a taxable estate exceeds $4 million, the sixth-lowest exemption in the U.S. The Illinois estate tax exemption is not adjusted for

inflation from year to year.

Illinois has a total of 20 different estate tax rates, running from as low as 0.8 percent to as high as 16 percent, depending on the value of the taxable estate.

Inheritance taxes in Kentucky depend on an heir’s relationship to the deceased and the value of the property inherited.

The tax doesn’t apply if the person inheriting property is the deceased’s spouse, parent, child, grandchild or sibling (including half-siblings).