States That Won’t Tax Your Estate When You Die

The majority of states do not levy taxes on estates. But, if you live in a state that does, also, you could face a tax if your estate is valued at $5 million or less. Generally, estate taxes are a sizable concern for wealthier people. Luckily, a financial advisor can help you create an effective estate plan to reduce or even eliminate estate taxes in your state.

Estate Tax Essentials

Estate taxes are charged to an estate after someone dies. Unlike inheritance taxes, which are paid by the beneficiaries of the estate, the estate itself must pay estate taxes. This can reduce the amount of money that goes to heirs.

The federal estate tax is rarely paid because it exempts estates smaller than $15 million or, for a couple, $30 million in 2026. ¹ Most estates are also exempt from state taxes, primarily because only 12 states and the District of Columbia levy these taxes.

Even in jurisdictions that have estate taxes, most estates still escape them due to exemptions that range from as low as $1 million to as high as the $15 million federal level. If an estate exceeds these exemptions, it could have to pay both federal and state estate taxes.

Estate taxes are calculated in different ways. The federal government and some states use a progressive method, with higher tax rates applied to larger estates. However, a flat estate tax applied to estates of any size may also be used.

Another way states vary concerns spousal portability. This concept lets a surviving spouse use a deceased partner’s unused estate tax exemption. Combining exemptions in this way allows a larger estate to escape taxation. The federal government and some states provide for spousal portability, but several do not.

States With Estate Taxes

Here’s a list of the states that have estate taxes, with key features for each as of 2026. Any state not on this list has no estate tax:

Connecticut

The exemption for Connecticut estates is $15 million, up from #13.99 million in 2025. Rather than a progressive tax, Connecticut levies a flat 12% tax on amount overs the exemption. The state does not allow for spousal portability. And it is the only state with its own gift tax, with an exemption that is equal to the federal gift tax exemption (which, for 2026, is $19,000 per person). ²

District of Columbia

Washington, D.C.’s estate tax applies to estate assets worth more than $4,988,400 in 2026, a figure that adjusts along with inflation. The D.C. estate tax is not portable, so when both spouses die only one exemption applies to the estate. ³

Hawaii

Hawaii sets its exemption at $5.49 million for 2026, the same level as 2025. Anything more is subject to a progressive tax at rates from 10% to 20%. Because Hawaii’s tax is portable, when a person dies their spouse can use their exemption, allowing a couple to protect up to $10.98 million. ⁴

Illinois

Illinois‘ estate tax begins at $4 million for 2026. The graduated tax rate goes up to 16% for taxable estates of $10.04 million and up. Illinois does not allow spousal portability. ⁵

Maine

For 2026, the threshold for exemption in Maine is $7.16 million, an amount that adjusts periodically. Amounts over that are subject to tax rates ranging from 8% to 12%. Maine does not allow portability. ⁶

Maryland

Maryland is the only state with both an estate tax and an inheritance tax. The estate tax applies to estates over $5 million for 2026. It has remained at this level since 2019. The graduated tax goes up to 16% for taxable estates over $10.04 million. Thanks to Maryland’s portability rule, couples can protect up to $10 million. ⁷

Massachusetts

The exemption threshold in Massachusetts is just $2 million, and it’s not portable. The estate tax rates are progressive and go up to 16%. ⁸

Minnesota

Minnesota’s exemption of $3 million is not portable. Tax rates start at 13% and go up to 16%. ⁹

New York

New York’s estate tax applies if the value of the estate exceeds $7.35 million, an amount adjusted periodically. In a wrinkle, once a New York estate reaches 105% of the threshold, the entire estate is taxable rather than only the amount over the threshold (called the estate tax “cliff”). Rates start at 3.06% and go up to 16%. New York also doesn’t provide for portability. ¹⁰

Oregon

Oregon has the lowest threshold for exemption which taxes anything over $1 million at rates from 10% to 16%. The state also does not make its tax portable between members of a married couple. ¹¹

Rhode Island

Rhode Island ties its exemption directly to a broad inflation benchmark so it adjusts annually. In 2026, the exemption is $1,838,056. The tax tops out at 16% and the exemption is not portable between spouses. ¹²

Vermont

Unlike most states that use graduated tax schedules, Vermont applies a flat 16% to amounts over its $5 million exemption. It’s not portable, and any gifts made within the last two years are included in the estate’s value. ¹³

Washington

Along with a low exemption of $3.076 million for 2026, Washington has a tax rate of up to 20%. Washington also does not allow portability. ¹⁴

State Estate Tax Considerations

States laws regarding estate taxes change, sometimes drastically. New Jersey, for example, completely eliminated its estate tax as of 2018. Other states may adjust their exemption thresholds as often as annually. For these reasons, it’s important to check with a financial advisor knowledgeable about your state’s laws before engaging in estate planning.

Estate Tax Mistakes That Cost Your Heirs Money

One of the most consequential and easily preventable mistakes is failing to file IRS Form 706 after the first spouse dies. This form elects portability, which allows the surviving spouse to use the deceased spouse’s unused federal estate tax exemption. If the estate does not file the form then it loses the exemption permanently. Even if no federal estate tax is owed at the first death, filing the return preserves the option for the surviving spouse to shelter a larger estate later. The filing deadline is nine months after the date of death, with a six-month extension available, and missing it can cost heirs millions in unnecessary tax exposure.

Life insurance is another area where families frequently make mistakes. If you own a life insurance policy at the time of your death, your taxable estate includes the full death benefit. On a $2 million policy, that addition alone could push an estate above a state exemption threshold. Transferring ownership of the policy to an irrevocable life insurance trust removes the proceeds from the estate, but the transfer must occur at least three years before death to be effective. Waiting too long to make this change eliminates the benefit entirely.

Taxable Estate Rules

Focusing only on the federal exemption and ignoring state exposure is a common oversight. A resident of Oregon with a $1.5 million estate owes nothing at the federal level but faces state estate tax because Oregon’s exemption is just $1 million. A resident of Massachusetts with a $3 million estate is in a similar position, since the state exemption is $2 million. Families in these states may not realize they have tax liability until after the estate is being settled.

Some states pull recent gifts back into the estate for tax purposes. Vermont, for example, includes gifts made within the last two years of life in the estate’s taxable value. A large gift intended to reduce the estate can end up having no effect if the donor dies within that window. Understanding your state’s specific rules around gift inclusion is essential before making transfers late in life.

Another misconception is that placing assets in a revocable trust removes them from the taxable estate. It does not. Because the grantor retains full control over the trust and can change or revoke it at any time, the IRS treats those assets as belonging to the grantor for estate tax purposes. Revocable trusts are useful for avoiding probate and managing asset distribution, but they do not reduce estate tax liability.

Steps to Take If Your Estate May Owe State or Federal Tax

If you’ve done the math and suspect you’ll be impacted by the estate tax, here are some common sense steps to take to prepare you for when the time comes.

Start by calculating your gross estate.

Include everything you own or have an interest in: real estate, bank and brokerage accounts, retirement account balances, business interests, vehicles and personal property. Also include assets that are easy to overlook, such as life insurance death benefits on policies you own and your share of any jointly held property. The total may be larger than you expect once every asset is accounted for.

Determine which state’s tax rules apply to you.

Your state of residence governs estate tax on most assets, but if you own real property in another state that levies its own estate tax, that state can tax the value of the property located within its borders. A retiree living in Florida with no state estate tax who still owns a vacation home in Maine could owe Maine estate tax on the value of that property.

Check Portability for Spouses

If you are married, confirm that your estate plan preserves both spouses’ exemptions. At the federal level this means filing Form 706 to elect portability after the first death. In states that do not allow portability, such as Massachusetts, New York and Oregon, preserving both exemptions may require using a bypass trust or credit shelter trust that funds at the first death rather than passing everything directly to the surviving spouse.

Review how your life insurance is owned.

If the death benefit would push your estate above the applicable exemption, consider transferring ownership to an irrevocable life insurance trust. Keep in mind the three-year lookback rule, which means the transfer must occur well in advance to be effective.

Consider charitable contributions

Evaluate whether annual gifting, charitable donations or irrevocable trust strategies could bring your estate below the exemption threshold. The federal annual gift exclusion allows you to give a set amount per recipient each year without using any of your lifetime exemption. Over time, a consistent gifting program can meaningfully reduce the size of your taxable estate.

Professional Review

Review your plan whenever your state changes its exemption or tax rates. Several states adjust their thresholds periodically, and a plan that worked under last year’s rules may need updating. A financial advisor and estate planning attorney can help you stay current and ensure your plan accounts for both federal and state exposure.

Bottom Line

Some states charge estate taxes on estates that exceed a minimum threshold as low as $1 million. Tax rates can reach 20%, depending on the size of the taxable amount. States also vary in the way they allow or prohibit spouses from combining their individual exemptions to shelter larger estates.

Estate Planning Tips

• If you live in a state with estate planning taxes, a financial advisor could help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• You can plan ahead for taxes to maximize your loved ones’ inheritances. For example, you can gift portions of your estate in advance to heirs, or even set up a trust.

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