Estate Taxes:  Beware the State Tax Bite

Under the current federal tax laws, nearly every American family will be spared from estate taxes upon death.  That is because there is a  current exemption amount of $11,180,000 per person (or doubled to $22,360,000 for a married couple).  Thus, unless your assets exceed these amounts at your date of death, your family/estate will not owe any estate taxes.  At least not to the IRS and the Federal government.

However, there are 12 states, plus the District of Columbia, that impose their own version of estate/inheritance taxes.  And these numbers can be substantial.  Here is a listing of these locales (and if you happen to reside in one of these States it may be very beneficial to seek out a quick consult with an estate planning attorney in your area):

State Exemption Level Estate Tax Rates
Connecticut $2,600,000 7.2% to 12%
District of Columbia $5,600,000 8% to 16%
Hawaii $5,490,000 10% to 15.7%
Illinois $4,000,000 Up to 16%
Maine $5,712,000 8% to 12%
Maryland $5,000,000 Up to 16%
Massachusetts $1,000,000 0.8% to 16%
Minnesota $2,400,000 13% to 16%
New York $5,490,000 Up to 16%
Oregon $1,000,000 10% to 16%
Rhode Island $1,540,000 0.8% to 16%
Vermont $2,750,000 16%
Washington $2,200,000 10% to 20%

Here are the 6 states that currently tax inheritances:

State Exemption Level Inheritance Tax Rates
Iowa Family exemptions Up to 15%
Kentucky Family exemptions 4% to 16%
Maryland Many exemptions 10%
Nebraska Exempt to spouse/charity 1% to 18%
New Jersey Family exemptions 11% to 16%
Pennsylvania Exempt to spouse/charity 4.5% to 15%

Like most everything else with taxes, the key to winning the game is planning!