An estate tax is a tax levied at death on certain assets and property owned by an individual (or in which an individual has certain ownership or control rights) before their death.
The federal government and some state governments levy this tax on estates with property and assets worth more than a threshold amount. Most people will not be subject to estate tax, as it is usually only imposed on large estates and, even then, deductions apply if the estate is transferred to a surviving spouse or a qualifying charity. For example, the federal tax is only paid for individuals who leave more than $5,500,000 (adjusted annually for inflation).
However, some states also have an estate tax, and those taxes can come into effect at different thresholds. If you live in one of the states listed below and have an estate at or above the threshold listed, we encourage you to consult with a qualified estate planning attorney to discuss your estate plan and whether lifetime tax planning could reduce the estate tax imposed on your estate.
States with an estate tax, the per person exclusion amount, and the highest tax rate. (Note that all information is as of 2017. Tax thresholds and rates may be adjusted annually):
Connecticut - $2,000,000 and 12%
Delaware - $5,490,000 and 16%
District of Columbia - $1,000,000 and 16%
Hawaii - $5,490,000 and 16%
Illinois - $4,000,000 and 16%
Maine - $5,490,000 and 12%
Maryland - $3,000,000 and 16%
Massachusetts - $1,000,000 and 16%
Minnesota - $1,800,000 and 16%
New Jersey - $2,000,000 and 16% (New Jersey’s estate tax is scheduled for repeal as of January 1, 2018)
New York - $5,250,000 and 16%
Oregon - $1,000,000 and 16%
Rhode Island - $1,500,000 and 16%
Vermont - $2,750,000 and 16%
Washington - $2,129,000 and 20%