The short answer
For 2026, the federal estate tax applies only to estates worth more than $15 million per person ($30 million for a married couple), at a top rate of 40%. Very few families pay it.
State taxes are a different story. In 2026:
- 12 states and the District of Columbia have an estate tax, paid by the estate before anything is distributed. Exemptions start as low as $1 million.
- 5 states have an inheritance tax, paid on what each heir receives, with the rate depending on how closely the heir is related. Spouses are exempt everywhere, and children are exempt in most of them.
- Maryland has both.
- The other 34 states have neither.
Because a house is often the biggest asset in an estate, a home in a high-value area can push an otherwise ordinary estate over a state threshold, especially in Oregon or Massachusetts.
States with an estate tax (deaths in 2026)
| State | 2026 exemption | Rates | Notes |
|---|---|---|---|
| Oregon | $1,000,000 | 10%–16% | Lowest in the country; not indexed |
| Rhode Island | $1,838,056 | up to 16% | Indexed each year |
| Massachusetts | $2,000,000 | up to 16% | Estates over $2M are taxed on the full value, minus a credit of up to $99,600 |
| Minnesota | $3,000,000 | 13%–16% | Up to $2M more for qualifying farms and small businesses; adds back gifts within 3 years of death |
| Washington | $3,076,000 (Jan–June); $3,000,000 (from July 1) | 10%–35% (Jan–June); 10%–20% (from July 1) | A 2026 law rolled back the 35% top rate for deaths from July 1, 2026 |
| Illinois | $4,000,000 | graduated | A threshold, not a credit; not portable between spouses |
| District of Columbia | $4,988,400 | graduated | Indexed |
| Maryland | $5,000,000 | up to 16% | Also has an inheritance tax |
| Vermont | $5,000,000 | 16% flat on the excess | |
| Hawaii | $5,490,000 | 10%–20% | Fixed, not indexed |
| Maine | $7,160,000 | 8%–12% | Indexed |
| New York | $7,350,000 | graduated | "Cliff": estates over $7,717,500 are taxed on the entire value |
| Connecticut | $15,000,000 | 12% flat on the excess | Matches the federal exemption; also the only state with a gift tax |
No state repealed or created an estate tax in 2025 or 2026. The biggest change was in Washington, which raised its top rate to 35% in mid-2025 and then brought it back to 20% for deaths from July 1, 2026.
New York's cliff
New York's exemption is $7,350,000 for 2026, but it disappears quickly above that. Between 100% and 105% of the exemption, the credit phases out, and an estate worth more than 105% ($7,717,500) gets no exemption at all and is taxed on every dollar. An estate just over the line can owe more than the amount it's over by. That's why New York planners pay close attention to estates near the threshold, including the value of the house.
Massachusetts after 2023
Massachusetts raised its threshold to $2 million for deaths from 2023 and replaced its old cliff with a credit of up to $99,600. Estates of $2 million or less owe nothing. Above that, the tax is figured on the whole estate and the credit is subtracted. With median home prices in many Boston suburbs well above $1 million, a paid-off house plus retirement savings can cross the line. See our Massachusetts rates by town.
States with an inheritance tax (2026)
| State | Spouse | Children and grandchildren | Siblings | Others |
|---|---|---|---|---|
| Pennsylvania | 0% | 4.5% | 12% | 15% |
| New Jersey | Exempt | Exempt | 11%–16% after $25,000 | 15%–16% |
| Kentucky | Exempt | Exempt | Exempt | 4%–16% (nieces, nephews, in-laws); 6%–16% (others) |
| Nebraska | Exempt | 1% over $100,000 | 1% over $100,000 | 11% over $40,000 (remote relatives); 15% over $25,000 |
| Maryland | Exempt | Exempt | Exempt | 10% |
- Pennsylvania is the one that catches the most families, because children pay 4.5%. On a $400,000 house left to two children, that's $18,000. Pay within three months of death and you get a 5% discount. The tax is delinquent after nine months. Transfers to or from a child 21 or younger are taxed at 0%, and farmland is exempt. See our Pennsylvania rates by city.
- New Jersey repealed its estate tax in 2018 but kept the inheritance tax. Spouses, children, parents and grandparents (Class A) pay nothing.
- Nebraska's tax is collected by counties. Spouses and heirs under 22 are exempt.
- Iowa repealed its inheritance tax for deaths on or after January 1, 2025.
The vacation home trap
State estate and inheritance taxes follow the real estate, not just the person. If you live in a no-tax state but own a house in a state with an estate tax, that state can tax the house when you die.
- Massachusetts taxes nonresidents on real estate located in Massachusetts. A Florida retiree with a Cape Cod cottage is measured against the $2 million threshold using their worldwide estate, and the instructions say not to subtract the mortgage from the property's value.
- New York, Oregon, Vermont, Hawaii, Connecticut and Illinois also tax nonresidents' real estate within their borders, generally with the tax prorated by the share of the estate located there.
- Pennsylvania taxes all real estate located in the state, even if the owner lived elsewhere.
Homes are valued at fair market value on the date of death, generally the same value used for federal purposes. That same value sets the heirs' new stepped-up basis for capital gains, which is usually good news. See property taxes on an inherited house.
Do TOD deeds or trusts avoid estate tax?
No. A transfer on death deed, a lady bird deed and a revocable living trust all avoid probate, but the house is still part of your taxable estate because you kept control of it while you were alive. Washington's revenue department says so explicitly for TOD real estate. The upside is the same: the heirs still get the stepped-up basis. Our comparison of living trusts, lady bird deeds and TOD deeds covers the probate side.
Giving the house away during your life does take it out of your estate, but it means your children lose the step-up and may face a big capital gains bill. See our 2026 gift tax guide for the numbers.
States with no estate or inheritance tax
The 34 states with neither tax in 2026: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin and Wyoming. Delaware repealed its estate tax in 2018 and Iowa its inheritance tax in 2025.
A missing estate tax doesn't make a state cheap to retire in. Texas has no estate or income tax, but its median homeowner pays about 28% more property tax than the national median. Florida's bills are close to the national median, mainly thanks to the homestead exemption and the Save Our Homes cap. See the best states for retirees and states with no income tax.
Sources
The federal exemption is from IRS Revenue Procedure 2025-32. State figures are from each state's revenue department or statute: Connecticut DRS, D.C. Office of Tax and Revenue (2026 D-76), Hawaii Rev. Stat. ch. 236D, the Illinois Attorney General, Maine Revenue Services, the Maryland Register of Wills, Mass. Gen. Laws ch. 65C and the Form M-706 instructions, the Minnesota Department of Revenue, the New York Department of Taxation and Finance, the Oregon Department of Revenue, the Rhode Island Division of Taxation, 32 V.S.A. § 7442a, the Washington Department of Revenue and Laws of 2026 ch. 209, the Pennsylvania Department of Revenue, the New Jersey Division of Taxation, the Kentucky Department of Revenue, Neb. Rev. Stat. § 77-2004 and the Iowa Department of Revenue. This is general information, not legal or tax advice.