While the majority of Americans will not have to pay any FEDERAL estate taxes under the current tax rules, this is NOT the case with STATE estate taxes.
Presently, twelve states have estate taxes. These include:
- Connecticut
- Hawaii
- Illinois
- Maine
- Massachusetts
- Minnesota
- New York
- Oregon
- Rhode Island
- Vermont
- Washington
- District of Columbia
State tax exemption amounts are typically lower than the federal exemption amounts. For example, New York imposes a state estate tax on estates exceeding $6,020,000 for 2022, but with a caveat! If the estate exceeds the exemption amount by more than 5%, then the entire estate, and not just the amount above the exemption, is subject to tax.
Six states have an inheritance tax which requires those who inherit property to pay a portion to the state. These include:
- Iowa
- Kentucky
- Maryland
- Nebraska
- New Jersey
- Pennsylvania
Check your state to see if you should factor state death taxes into your plans.
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