Wyoming does not levy an estate tax. There is a federal estate tax, though, that will apply to Wyoming residents with large enough estates. This page will walk Cowboy State residents though what they’ll need to know about the estate tax to make sure their estates are planned carefully and their families are prepared for what will happen when they die. Hiring a financial advisor to help you through the intricacies of estate planning may make sense. SmartAsset can help you find the right advisor for your situation with our free financial advisor matching service.
Wyoming Estate Tax
Wyoming has no estate tax. It is one of 38 states that does not levy an estate tax.
What Is the Estate Tax?
The estate tax, also referred to as the “death tax,” applies to the estates of people who recently died. The tax is levied before the money and assets in the estate are dispersed to the deceased’s legally designated heirs. The estate tax only applies to estates valued above a threshold legally determined by the government levying the tax.
The inheritance tax is different from the estate tax. Heirs pay the inheritance tax after they receive an inheritance.
Wyoming Inheritance and Gift Tax
Wyoming does not levy an inheritance tax either. Be careful, though, because there is a chance that another state’s inheritance tax will apply to you if someone living in that state leaves you an inheritance. Pennsylvania, for example, has an inheritance tax that applies to all property left by residents of the state, even if the beneficiary does not live there. Check local laws if someone from another state leaves you an inheritance so you don’t end up missing a tax payment.
Wyoming has no gift tax either. The federal gift tax has a $15,000 exemption per year per gift recipient in 2021, going up to $16,000 in 2022. This means you can give up to $16,000 to an unlimited number of people each year with no gift tax implications. However, if you give more than $16,000 to a single person, then you must report that gift to the IRS. The amount exceeding the $16,000 exemption will count against your lifetime gift tax exemption of $12.06 million and your federal estate tax exemption.
Federal Estate Tax
Wyoming doesn’t have an estate tax, but the federal estate tax may apply if your estate is large enough. The 2017 tax bill established an exemption of $11.70 million for deaths in 2021 and $12.06 million in 2022. The federal estate tax exemption is portable, meaning a married couple can apply both of their exemptions to their estate when the second spouse dies. With the right legal maneuvers, a couple can protect up to $24.06 million of their estate.
Estates exceeding the exemption are subject to a progressive tax with a top rate of 40%.
This is how it works: Let’s say your estate is worth $15.06 million and you are single. First, subtract the $12.06 million exemption, leaving you with a taxable estate of $3 million. There is a base payment of $345,800 on the first $1 million, and you’ll also owe 40% of the remaining $2 million, which comes to $800,000. Add back the base payment and you are left with a total tax bill of $1,145,800.
|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 $12.06 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.
Overall Wyoming Tax Picture
Wyoming is very tax-friendly for retirees. The state does not tax Social Security. It also doesn’t tax withdrawals from retirement accounts like 401(k) plans or income from private or public pensions. Wyoming actually doesn’t have an income tax at all, so any money you make in retirement, including wages from a post-retirement job, won’t be taxed by the state.
Wyoming also has low property taxes, with an average effective rate of just 0.57%.
The sales tax in Wyoming is also low. The average total sales tax rate is 5.39%, counting both state and local taxes.
Estate Planning Tips
- A financial advisor can make planning an estate easier by helping you through the sometimes difficult aspects. SmartAsset can help you find one with our free financial advisor matching service. You answer a few questions and we match you with up to three advisors, all fully vetted and free of disclosures. You then talk to each of your advisor matches and make a decision about how you want to proceed.
- If you write a will, make sure you name guardians for any minor children you have. You might not want to think about it, but it is better to have a plan in place should something tragic happen.
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