Estate planning isn’t only about who inherits what—it’s also about understanding which taxes might reduce what your loved ones receive. Will your loved ones owe state estate taxes? While the federal government imposes a federal estate tax based on the value of everything a person owns at death, some states add their own taxes on top of that. These state-level “death taxes” (estate or inheritance taxes) can significantly affect how much ultimately reaches your beneficiaries. Really, it comes down to a crucial question: will your loved ones owe state estate taxes on your legacy?
States Can Tax a Death?
Two types of state taxes may apply after a death:
- Estate tax: Paid by the estate before assets are distributed.
- Inheritance tax: Paid by the person receiving the inheritance.
Knowing how these taxes work—and when they apply—is essential for effective legacy planning.
Which States Impose a Death Tax?
As of 2025, the following states have an estate tax:
Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington.
The following states impose an inheritance tax:
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Maryland is unique because it imposes both.
State tax laws change frequently, so it’s vital to review the latest rules with an estate planning attorney when updating your will or trust. In general, an estate is subject to state death taxes if the deceased person lived in that state or owned real estate or tangible property located in that state at the time of death.
Examples of When State Death Taxes Apply
These simplified examples show how state estate taxes and inheritance taxes can affect your estate planning. Consider whether your loved ones will owe state estate taxes in these scenarios.
1. New York resident, inheritor anywhere
If your uncle lived in New York, his estate may owe New York estate tax depending on the estate’s value.
You would not owe an inheritance tax because New York does not impose one.
2. Florida resident, no property elsewhere
If your uncle lived in Florida and owned all property there, his estate would not owe state-level estate tax because Florida imposes none. Florida also has no inheritance tax.
3. Florida resident, inheritor lives in New York
Your place of residence does not change the tax outcome. If all your uncle’s property was in Florida, no state death tax applies.
4. Florida resident who owns a home in New York
If your uncle lived in Florida but owned real estate in New York, New York may assess estate tax only on the New York property.
5. Kentucky resident, inheritor lives in Florida
Kentucky does not have an estate tax, but it does impose an inheritance tax. If you inherit from a Kentucky resident, you may owe inheritance tax even if you live in Florida.
6. Snowbirds with homes in two states
If John splits his time between Florida and Connecticut but is legally a Connecticut resident, Connecticut will treat his entire estate as taxable—even his Florida home.
Note: Your state of residency, not where you spend a few months a year vacationing, determines tax exposure. These scenarios show how easily state death taxes can sneak up on families—especially when multiple states are involved or the deceased person owned property across state lines.
Plan Ahead to Minimize Unnecessary Taxes
State estate and inheritance taxes can meaningfully reduce the legacy you want to leave behind. Understanding how these taxes apply—and structuring your estate plan accordingly—can protect your beneficiaries and preserve more of what you’ve built. Will your loved ones owe state estate taxes? It’s essential to find out.
If you live in or own property in a state with a death tax, or if you want to ensure your family won’t face unexpected tax consequences, we can help you create a plan that minimizes risk and keeps your legacy intact.
Contact us today to schedule your consultation.
