Levied on the total value of a decedent's estate before assets are distributed. Paid by the estate.
Imposed on beneficiaries based on the amount received and their relationship to the decedent. Collected by certain states only.
The federal exemption may be generous, but many states impose their own estate or inheritance taxes — often with much lower thresholds.
| State | Tax Type | Notes |
|---|---|---|
| CT, HI, IL, MA, ME, MN, NY, OR, RI, VT, WA, DC | Estate Tax | State-level exemptions range from ~$1M to ~$9M; top rates up to 20% |
| MD | Estate & Inheritance Tax | Only state with both taxes; inheritance tax can reach 10% |
| NE, KY, PA, NJ | Inheritance Tax | Rates vary by relationship (0%–18%) |
| FL, TX, AZ, VA, WI, CO, etc. | None | No state-level estate or inheritance tax |
Even with favorable federal changes, your estate could still face significant taxes depending on where you reside or own property.
The 2025 annual exclusion allows individuals to gift up to $19,000 per recipient ($38,000 for couples) without tapping into the lifetime exemption. This remains a simple and effective way to reduce your taxable estate.
With a new exemption floor of $15 million per person, there's now more flexibility in how and when to transfer assets. Whether you act before or after 2026, utilizing the exemption through outright gifts or trust transfers remains essential to long-term planning.
Spousal Lifetime Access Trust (SLAT): Allows you to remove assets from your estate while providing access to your spouse.
Dynasty Trust: Passes wealth across generations without triggering additional estate taxes.
Grantor Retained Annuity Trust (GRAT): Transfers appreciating assets to heirs with minimal gift tax impact.
Each of these tools can help control timing, tax exposure, and multigenerational wealth transfers.
Life insurance owned inside an ILIT avoids estate tax and provides liquidity to cover tax liabilities or equalize distributions. This remains a cornerstone strategy for many estate plans.
Options like Charitable Remainder Trusts (CRTs) and Donor-Advised Funds (DAFs) allow you to reduce your taxable estate while supporting the causes you care about. The OBBBA also enhances deduction opportunities for charitable giving in certain cases.
Relocating to a state with no estate or inheritance tax can materially improve your estate's after-tax outcome — but such moves must be genuine and well-documented. Changes in domicile, primary residence, and asset ownership all require legal precision.
The One Big Beautiful Bill Act has transformed the federal estate tax environment — offering more room to transfer wealth without federal taxation. But this shouldn't lead to complacency. If your estate exceeds $15 million individually or $30 million as a couple, proper planning remains essential.
State taxes, family goals, liquidity needs, and evolving laws all demand a coordinated strategy. At 44 North Capital, we partner with you and your legal and tax advisors to design plans that reflect your values, your goals, and your legacy.
Now is the right time to assess whether your current estate plan takes full advantage of the new law — and whether it's built for what comes next.
