Last Updated: April 2026
Most Americans assume that only the very wealthy need to worry about estate taxes — and at the federal level, that’s largely true. The federal estate tax exemption sits at $13.61M per person in 2024, meaning only estates above that threshold owe federal estate tax. But 17 states plus the District of Columbia impose their own separate estate taxes, often with much lower exemptions. Oregon taxes estates above just $1M. Massachusetts taxes above $2M. A perfectly ordinary estate — a family home, retirement accounts, and savings — can easily cross these thresholds in high-cost states.
This guide covers every state with an estate tax in 2026, their current exemptions and rates, the dangerous “cliff effect” in New York and Massachusetts, the critical difference between estate tax and inheritance tax, and the portability trap that catches many surviving spouses in states without federal portability alignment.
The following states impose a separate state-level estate tax in 2026. Tax rates shown are the top marginal rate — most states use progressive brackets starting at lower rates for amounts just over the exemption.
| State | Exemption (2026) | Top Rate | Notes |
|---|---|---|---|
| Connecticut (CT) | $13.6M | 12% | Aligned with federal exemption; eliminated its estate tax cliff in recent years |
| New York (NY) | $6.94M | 16% | Severe cliff effect — see section below; indexed for inflation annually |
| Maine (ME) | $6.41M | 12% | Indexed for inflation; graduated rates from 8% to 12% |
| Hawaii (HI) | $5.49M | 20% | Highest top rate of any state; allows portability (rare among states) |
| Vermont (VT) | $5M | 16% | Flat $5M exemption; 16% flat rate on taxable amount above exemption |
| Maryland (MD) | $5M | 16% | Only state with both estate tax AND inheritance tax; exemption raised from $1M |
| Oregon (OR) | $1M | 16% | Lowest exemption in the country; affects many middle-class Oregon estates; graduated 10–16% |
| Minnesota (MN) | $3M | 16% | Indexed periodically; graduated rates; no portability |
| Illinois (IL) | $4M | 16% | Not indexed for inflation (unchanged since 2012); graduated 0.8–16% |
| Massachusetts (MA) | $2M | 16% | Cliff effect historically severe; 2023 reform reduced cliff but still risky near threshold |
| Rhode Island (RI) | $1.77M | 16% | Indexed annually; graduated rates starting at 0.8% |
| Washington State (WA) | $2.193M | 20% | Second highest top rate after Hawaii; not indexed for inflation; 10–20% brackets |
| DC | $4M | 16% | DC estate tax mirrors prior federal structure; graduated rates |
| Iowa (IA) | No estate tax | — | Iowa repealed its estate tax; only inheritance tax remains (being phased out) |
| New Jersey (NJ) | No estate tax | — | NJ repealed its estate tax in 2018; inheritance tax remains for non-close relatives |
| Pennsylvania (PA) | No estate tax | — | PA has no estate tax but has inheritance tax (0–15% depending on relationship) |
States not listed have neither a state estate tax nor an inheritance tax. These include Florida, Texas, California, Arizona, Nevada, Georgia, North Carolina, and most of the South and Mountain West.
The most dangerous quirk in state estate tax law is the “cliff effect” — a design flaw where crossing the exemption threshold by even $1 triggers tax on the entire taxable estate, not just the amount above the exemption. This is the opposite of how federal estate tax works (where only the excess above the exemption is taxed).
New York’s exemption in 2026 is approximately $6.94M. But here is the cliff: if your estate is worth more than 105% of the exemption ($7.29M), you receive zero exemption benefit — the entire estate is taxable from the first dollar. An estate worth $7.3M pays New York estate tax on all $7.3M. An estate worth $6.94M pays nothing. The difference in tax between a $6.94M estate and a $7.3M estate can exceed $1M.
| Estate Value | NY Estate Tax Owed (approx) | Effective Rate |
|---|---|---|
| $6,940,000 | $0 | 0% |
| $7,000,000 | ~$32,000 (partial cliff applies in this range) | 0.5% |
| $7,290,000 (105% threshold) | ~$592,000 (cliff fully triggered) | 8.1% |
| $8,000,000 | ~$793,000 | 9.9% |
| $10,000,000 | ~$1,213,000 | 12.1% |
Planning strategies to avoid the NY cliff include gifting assets before death (NY has a three-year look-back on certain gifts), charitable bequests to reduce the gross estate below the exemption, and irrevocable life insurance trusts (ILITs) to fund the tax liability outside the estate.
Massachusetts historically had one of the most severe estate tax cliffs — an estate worth $1 over the threshold paid tax on the entire estate value from dollar one. A 2023 Massachusetts law reform (effective January 1, 2023) changed this: estates now receive a $99,600 credit equivalent (roughly the tax on the first $2M), significantly reducing the cliff effect. However, planning near the $2M threshold remains important, and the overall Massachusetts estate tax burden — rates from 0.8% to 16% — is still substantial.
The Tax Cuts and Jobs Act of 2017 doubled the federal estate tax exemption. In 2024, the exemption is $13.61M per person. Unless Congress acts, the TCJA provisions sunset after December 31, 2025, reverting the exemption to approximately $7M (the pre-TCJA amount, adjusted for inflation). For married couples who have relied on the elevated exemption for estate planning, the sunset could dramatically change their exposure.
| Scenario | 2024 Exemption | Post-Sunset (~2026) | Additional Exposure |
|---|---|---|---|
| Individual | $13.61M | ~$7M | ~$6.6M more exposed |
| Married couple (with portability) | $27.22M combined | ~$14M combined | ~$13.2M more exposed |
Federal portability allows a surviving spouse to use any unused portion of the deceased spouse’s federal estate tax exemption. Example: Husband dies with a $5M estate, using $5M of his $13.61M exemption. The surviving wife can claim the unused $8.61M and add it to her own $13.61M — effectively a $22.22M combined exemption. This is done by filing a timely federal estate tax return (Form 706) even if no estate tax is owed, solely to elect portability.
Most state estate taxes do NOT have portability. Hawaii is the rare exception. In states like Washington ($2.193M), Oregon ($1M), and Massachusetts ($2M), each spouse must use their own exemption or lose it. A married couple in Oregon where the first spouse leaves everything to the survivor passes $0 estate tax on the first death (marital deduction), but the surviving spouse then faces a single $1M exemption on death — exposing significantly more of the estate to tax than a well-structured plan would allow.
The primary planning tool to avoid the no-portability trap in state estate taxes is a credit shelter trust (also called a bypass trust or exemption trust). On the first spouse’s death, assets up to the state exemption are placed in the trust rather than passing outright to the survivor. The trust assets are not in the surviving spouse’s taxable estate but the survivor can still benefit from the trust’s income and principal under hardship standards. This preserves both spouses’ state exemptions even in states without portability.
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Speak to a Greenback Advisor →17 states plus the District of Columbia impose a state estate tax in 2026. This is down from a peak of 22+ states as several states have repealed their estate taxes over the past decade (New Jersey repealed in 2018 being the most notable). The remaining states range from Connecticut (with a high $13.6M exemption) to Oregon (with a low $1M exemption).
Estate tax is paid by the estate itself before assets are distributed to beneficiaries. It’s based on the total value of the deceased person’s estate and is owed before heirs receive anything. Inheritance tax is paid by each individual beneficiary on what they receive, and the rate often depends on their relationship to the deceased (spouses and children typically pay less or nothing). Six states have inheritance tax; Maryland is the only state with both. The federal government only has an estate tax — no federal inheritance tax exists.
New York’s estate tax cliff means that if an estate exceeds 105% of the NY exemption ($6.94M in 2026, so the cliff triggers above approximately $7.29M), the entire estate is taxed from dollar one — the exemption disappears entirely. This can mean an estate worth $7.3M owes over $500,000 in NY estate tax, while an estate worth $6.94M owes zero. This is a radically different design from federal estate tax, where only the amount above the exemption is taxed.
Leaving everything to a spouse avoids estate tax on the first death because of the unlimited marital deduction — transfers between US citizen spouses are exempt from estate tax. However, this strategy defers rather than eliminates the tax. The surviving spouse then has only their own single exemption on death. In states without portability (most state estate taxes), this approach wastes the first spouse’s exemption. A credit shelter trust is the standard solution to preserve both exemptions in states like Oregon, Massachusetts, and Washington.
Under current law, the Tax Cuts and Jobs Act provisions expire after December 31, 2025, which would revert the federal estate tax exemption from $13.61M back to approximately $7M (the pre-TCJA amount, adjusted for inflation). Congress could act to extend or make the higher exemption permanent, but as of early 2026 this remains uncertain. Estates between $7M and $13.61M should have contingency planning in place in case the sunset occurs.