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<\/p>\nInheritance and estate taxes\u2014sometimes dubbed \u201cdeath taxes\u201d\u2014remain one of the most uneven features of the American tax system. <\/p>\n
While federal rules shield the vast majority of families from paying anything at all, state-level policies tell a far more varied story, as lawmakers balance concerns about revenue, competitiveness and wealthy residents relocating elsewhere.<\/p>\n
Federal Threshold Leaves Few Affected<\/p>\n
At the national level, the estate tax in 2026 will apply only to the largest fortunes. Individuals can transfer roughly $15 million completely free of federal estate tax, while married couples can combine their exemptions for a total of about $30 million. Only the value above those limits is taxed.<\/p>\n
The estate tax is assessed on the total value of a person\u2019s estate before assets are passed on, and the estate itself pays the bill. Because the exemption is so high, only a small fraction of estates across the country are subject to the federal levy.<\/p>\n
There is no federal inheritance tax.<\/p>\n
States Split on Estate Tax<\/p>\n
While the federal government has set a high bar before estates face taxation, a dozen states and Washington, D.C., continue to impose their own estate taxes, creating a patchwork of rules across the country.<\/p>\n
As the federal exemption has climbed, states have taken divergent paths. Some have raised their thresholds in an effort to remain competitive, particularly amid concerns that wealthy residents could relocate to states with no estate tax. Others have opted for smaller increases, prioritizing revenue stability over full alignment with federal law.<\/p>\n
Connecticut has moved furthest toward matching the federal system. Beginning in 2026, the state\u2019s exemption will mirror the national level: $15 million per individual and $30 million for married couples. Its estate tax is capped at a flat 12 percent and applied only above that amount.<\/p>\n
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Elsewhere, adjustments have been more restrained. New York has raised its exemption to $7.35 million in 2026, a figure that remains well below the federal threshold. The state also retains a distinctive \u201ccliff\u201d feature in its tax code: if an estate surpasses the exemption by more than 5 percent, taxation applies to the entire estate rather than solely to the amount above the limit.<\/p>\n
Rhode Island\u2019s policy remains among the most stringent. Even after a scheduled increase takes effect in 2026, estates valued above $1.83 million will be subject to taxation\u2014placing its threshold far below both federal standards and those of several peer states.<\/p>\n
Lawmakers often frame these changes as essential to preventing an exodus of wealthy households to states such as Florida or Texas<\/a>, which do not impose estate taxes. Yet research suggests the picture is more nuanced. Although New York has experienced a net outflow of high-income households in recent years, other estate-tax states such as Maine have recorded gains in affluent residents, according to 2023 findings from the Center on Budget and Policy Priorities<\/a>.<\/p>\n Inheritance Taxes<\/p>\n A separate but related levy, the inheritance tax, applies not to the estate itself but to the individual who receives assets from someone who has died. Rates typically vary depending on the size of the inheritance and the beneficiary\u2019s relationship to the deceased.<\/p>\n