States Without an Estate Tax or an Inheritance Tax
2015 List of States Without an Estate Tax or an Inheritance Tax
Currently, a majority of U.S. states do not collect a death tax at the state level. Here is a summary of the changes to state estate taxes and inheritance taxes that took effect during the past few years:
- Delaware repealed its estate tax as of January 1, 2018.
- State estate taxes were abolished by legislative action on January 1, 2010, in both Kansas and Oklahoma.
- Hawaii enacted an estate tax effective May 1, 2010. Then in May 2012, Hawaii tweaked its laws to provide that the Hawaii estate tax exemption will be tied to the federal estate tax exemption for decedents dying after January 25, 2012. In addition, Hawaii is the only state that currently offers portability of its estate tax exemption between married couples.
- On January 1, 2010, state estate taxes were repealed in both Illinois and North Carolina due to a repeal of the federal estate tax. Nonetheless, estate taxes came back in both states effective January 1, 2011, but North Carolina turned around and repealed its estate tax retroactively to January 1, 2013.
- On January 1, 2010, Rhode Island's estate tax exemption increased to $850,000 and has been indexed for inflation annually. Then, in June 2014, Rhode Island acted to increased its estate tax exemption to $1.5 million for deaths occurring on or after January 1, 2015, and the exemption will continue to be adjusted annually for inflation in future years.
- Effective January 1, 2011, Vermont's estate tax exemption increased to $2.75 million.
- Under Ohio budget laws, the Ohio estate tax was repealed as of January 1, 2013.
- On January 1, 2012, Oregon's estate tax rates changed so that estates valued between $1 million and $2 million will pay slightly less in estate taxes and estates valued over $2 million will pay more in estate taxes. Aside from this, in November 2012 a ballot measure to completely repeal Oregon's estate tax was defeated by a majority vote.
- Ilinois' estate tax exemption increased to $3.5 million effective January 1, 2012, and to $4 million effective January 1, 2013.
- Maine's estate tax exemption increased to $2 million on January 1, 2013.
- Tennessee repealed its estate tax in 2016.
- In 2012 legislation was passed that would have phased out Indiana's inheritance tax by 2022. In addition, the inheritance tax exemption was increased from $100,000 to $250,000 for certain family members effective January 1, 2012. Nonetheless, in May 2013 Indiana's inheritance tax was repealed retroactively to January 1, 2013, thereby allowing Indiana to join the list of states below.
- In June 2013, Washington made several changes to its state estate tax laws. Beginning in 2014, the $2 million estate tax exemption was indexed for inflation annually; an estate tax deduction of up to $2.5 million was available for certain family-owned business interests the values of which do not exceed $6 million, and the estate tax rates on the top four estate tax brackets were increased.
- In an unusual move, Minnesota enacted a state gift tax that went into effect on July 1, 2013. Aside from this, Minnesota tweaked its estate tax laws as they are applied to nonresidents who own real estate in Minnesota. The new legislation included Minnesota property held in a pass-through entity such as an S corporation, a partnership (including a multi-member LLC taxed as a partnership), a single-member LLC or similar entity, or a trust in a nonresident's estate. But in another unusual move, legislation was signed in March 2014 which repealed the state gift tax retroactively. In addition, the state estate tax exemption was retroactively increased to $1.2 million for all 2014 deaths and the estate tax rate was tweaked so that the first dollars are taxed at a 9% rate which maxes out at 16%. The estate tax exemption will then be increased in $200,000 increments so that it reaches $3 million in 2020. The new law also allows married couples to use ABC Trust planning in order to defer the payment of all estate taxes until after the death of the second spouse. Finally, the law taxing a nonresident decedent's interest in a pass-through entity was also modified to exclude certain publicly traded entities, but it still applies to entities taxed as partnerships or S corporations that own a closely held business, farm, or cabin.
- In April 2014, New York made significant changes to its estate tax laws by increasing the state estate exemption from $1 million to $2.0625 million for deaths occurring on or after April 1, 2014, and before April 15, 2015. The exemption will then continue to increase on an annual basis until it matches the federal estate tax exemption in 2019.
- On May 15, 2014, H.B. 739, Maryland Estate Tax - Unified Credit was signed into law. This new law repeals and then re-enacts Maryland's estate tax so that the estate tax exemption will increase beginning in 2015 until it equals the federal estate tax exemption in 2019. In addition, beginning in 2019 Maryland will recognize portability of its estate tax exemption between married couples. Refer to Maryland Estate Tax Changes Go Into Effect in 2015 for more information about these changes.
- New Jersey phased out its estate tax in 2018 .
List of States That Will Not Collect Estate or Inheritance Taxes in 2020
Here is the list of the jurisdictions that will not impose a state estate tax or a state inheritance tax as of January 1, 2020:
- New Hampshire
- New Mexico
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- West Virginia
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.
Delaware.gov. “Estate Tax.” Accessed March 27, 2020.
Kansas Department of Revenue: “Kansas Estate Tax Repealed for Estates of Decedents Dying on or After January 1, 2010.” Accessed March 27, 2020.
Oklahoma Tax Commission. “Estate Forms.” Accessed March 27, 2020.
ACTEC. “State Death Tax Chart.“ Accessed March 27, 2020.
Hawaii.gov. “Letter Ruling Request for an Extension to Elect Portability for Estate Tax Purposes.” Accessed March 27, 2020.
Illinois General Assembly. "Illinois Tax Handbook for Legislators," Pages 38-39. Accessed March 27, 2020.
North Carolina General Assembly. “Chapter 105. Taxation. Subchapter I. Levy of Tax.” Accessed Jan. 20, 2020.
Rhode Island General Assembly. “Chapter 44-22 Estate and Transfer Taxes – Liability and Computation.” Accessed March 27, 2020.
Rhode Island Division of Taxation. “Summary of Legislative Changes.” Accessed March 27, 2020.
Vermont Official State Website. “Estate Tax.” Accessed March 27, 2020.
Ohio Department of Taxation. “ATTN: Tax Change - Ohio Estate Tax Has Ended.” Accessed March 27, 2020.
Oregon State Bar. “The 7 Legislative Wonders: 2011 Oregon Legislative Update for Estate Planners,” Page 5. Accessed March 27, 2020.
Ballotpedia. “Oregon Estate Tax Phase-Out Initiative, Measure 84 (2012).” Accessed March 27, 2020.
Illinois General Assembly. “Illinois Estate Taxes,” Page 3. Accessed March 27, 2020.
Maine Revenue Services. “Maine Estate Tax for Deaths Occurring After 2012.” Accessed March 27, 2020.
Tennessee Department of Revenue. "Inheritance Tax." Accessed March 27, 2020.
IN.gov. “Indiana Inheritance Tax Frequently Asked Questions,” Page 6. Accessed March 27, 2020.
Casetext. “Indiana’s Inheritance Tax Will Begin a Phased-in Repeal in 2013.” Accessed March 27, 2020.
FindLaw. “Washington Estate Taxes.” Accessed March 27, 2020.
Washington State Legislature. “RCW 83.100.048. Deduction—Qualified Family-Owned Business Interests.” Accessed March 27, 2020.
Washington State Department of Revenue. “Estate and Transfer Tax,” Pages 33-34. Accessed March 27, 2020.
Minnesota Department of Revenue. ”Minnesota Estate Tax Study,” Pages 24-25. Accessed March 27, 2020.
Minnesota Legislature. “The Minnesota Estate Tax.” Accessed March 27, 2020.
Minnesota Legislature. “HF 1777 4th Engrossment - 88th Legislature (2013 - 2014).” Accessed March 27, 2020.
Minnesota Legislature. “Estate Tax Rates.”Accessed March 27, 2020.
Minnesota CLE. “The Latest on the Minnesota Estate Tax – As the Dust Settles,” Pages 3-5. Accessed March 27, 2020.
Minnesota Department of Revenue. “Pass-Through Entities for Nonresidents.” Accessed March 27, 2020.
NYSBA. “2014 Changes to New York's Estate, Gift, and Trust Income Taxes (Revised).” Accessed March 27, 2020.
LegiScan. “2014 MD HB739 (Summary) Maryland Estate Tax - Unified Credit.” Accessed March 27, 2020.
Official Site of the State of New Jersey. “Inheritance and Estate Tax Branch.” Accessed March 27, 2020.