New Hampshire has no estate tax. The federal estate tax may apply to residents of the state, though, if their estates are worth enough. This guide is for Granite Staters who are looking for the information they need to work through estate tax issues as they plan their estates and make sure everything is easy for their families after their deaths. One of the best steps to take in planning your estate is hiring a financial advisor to help you work through any problems. SmartAsset can help you find an advisor with our free financial advisor matching service.
New Hampshire Estate Tax
New Hampshire does not levy an estate tax. A total of 38 states have no estate tax.
What Is the Estate Tax?
Governments levy estate tax on the estates of people who have recently died, before the money and assets are dispersed to a person’s heirs. The estate tax is sometimes called the “death tax.” The tax only applies to estates with money and assets exceeding a certain threshold, which is legally determined by the entity levying the tax.
The estate tax is not the same as the inheritance tax. The inheritance tax applies to assets that are already passed on to a person’s heirs, who are responsible for paying the tax on their inheritance.
New Hampshire Inheritance and Gift Tax
New Hampshire also has no inheritance tax. There is a chance, though, that you will owe inheritance tax in another state if someone living there leaves you an inheritance. Kentucky’s inheritance tax, for instance, applies to all in-state property. This is true even if the inheritor of that property lives in another state that does not have an inheritance tax. If someone out-of-state leaves you an inheritance, check local laws. This could save you the hassle of dealing with a missed tax bill.
New Hampshire also has no gift tax. The federal gift tax exemption is $15,000 per year for each gift recipient. If you give one person more than $15,000 in a year, you’ll have to file the gift with the government. The excess counts against your $11.18 million lifetime gift tax exemption, and it lowers your federal estate tax exemption.
Federal Estate Tax
New Hampshire does not charge an estate tax, but the federal government does. The federal estate tax may apply to you if your estate is valuable enough. The federal exemption is $11.18 million for 2018. The 2017 tax bill established that number, which will further increase in 2019 to $11.40 million. The federal estate tax exemption is portable, meaning married couples can use both of their exemptions on their estate when the second spouse dies. This makes it possible for a married couple to protect up to $22.36 million when both spouses die.
Any estate worth more than the exemption is taxed according a series of ascending rates, topping out at 40%.
This is how it works: Let’s consider an estate worth $15.18 million, where the person who has died was not married. Subtract the exemption and you are left with a taxable estate of $4 million. This estate is in the top tax bracket, and there is a $345,800 base payment on the first $1 million. You’ll owe 40% tax on the remaining $3 million, which comes to $1.20 million. Add in the base payment and the total tax bill on this estate is $1,545,800.
|FEDERAL ESTATE TAX RATES|
|Taxable Estate*||Base Taxes Paid||Marginal Rate||Rate Threshold**|
|$1 – $10,000||$0||18%||$1|
|$10,000 – $20,000||$1,800||20%||$10,000|
|$20,000 – $40,000||$3,800||22%||$20,000|
|$40,000 – $60,000||$8,200||24%||$40,000|
|$60,000 – $80,000||$13,000||26%||$60,000|
|$80,000 – $100,000||$18,200||28%||$80,000|
|$100,000 – $150,000||$23,800||30%||$100,000|
|$150,000 – $250,000||$38,800||32%||$150,000|
|$250,000 – $500,000||$70,800||34%||$250,000|
|$500,000 – $750,000||$155,800||37%||$500,000|
|$750,000 – $1 million||$248,300||39%||$750,000|
|Over $1 million||$345,800||40%||$1 million|
*The taxable estate is the total above the federal exemption of $11.18 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.
Overall New Hampshire Tax Picture
New Hampshire is tax-friendly for retirees. The state does not tax Social Security income. It also does not tax withdrawals from retirement accounts like 401(k) plans or income from public or private pensions. In fact, New Hampshire has no state income tax whatsoever. That means the state won’t charge tax on any money you make from a post-retirement job either.
New Hampshire does have high property taxes, though. The average effective rate is 2.19%. There is a rebate, however, for anyone who earns less than $20,000 in annual income ($40,000 for married couples). A complicated formula determines the amount of the rebate, which could cover the entire tax.
New Hampshire also has no sales tax, though it has a sin tax for items like alcohol and tobacco.
Estate Planning Tips
- Planning an estate takes a certain amount of time, energy and attention to detail. It might make sense to find someone to do it for you. Find an advisor to help with SmartAsset’s free financial advisor matching service. You answer a few questions about your finances and we match you with up to three advisors in your area, all fully vetted and free of disclosures. After interviewing each advisor, you make a decision about how you want to proceed.
- There are some serious risks to DIY estate planning. Find an advisor or a lawyer to help unless you are very confident in your financial skills and attention to detail.
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