NOTE: State laws change frequently and the following information may not reflect recent changes in the laws. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.
Currently a majority of U.S. states do not collect an estate tax or an inheritance tax at the state level. Here is a summary of the changes to state estate taxes and inheritance taxes that took effect during the past few years:
- Delaware enacted a state estate tax effective July 1, 2009, which will expire on July 1, 2013.
- State estate taxes were abolished by legislative action on January 1, 2010 in both Kansas and Oklahoma.
- Hawaii enacted a state estate tax effective May 1, 2010, and in May 2012 the Hawaii estate tax laws were tweaked to provide that the Hawaii estate tax exemption will be tied to the federal estate tax exemption for decedents dying after January 25, 2012.
- On January 1, 2010, state estate taxes were repealed in both Illinois and North Carolina due to the repeal of the federal estate tax. Nonetheless, estate taxes came back in both states effective January 1, 2011.
- In several states, including New Hampshire and Virginia, bills were defeated in 2009 that would have enacted a state estate tax.
- Effective January 1, 2010, Rhode Island's estate tax exemption increased to $850,000 and will be indexed for inflation thereafter. This means that the 2013 exemption has increased to $910,725, up from $892,865 in 2012.
- Effective January 1, 2011, Vermont's estate tax exemption increased to $2.75 million.
- Under Ohio budget laws the Ohio estate tax has been repealed as of January 1, 2013.
- On January 1, 2012, Oregon's estate tax rates changed such that estates valued between $1 million and $2 million will pay slightly less in estate taxes and estates valued over $2 million will pay more in estate taxes. Aside from this, in 2012 a ballot measure to completely repeal Oregon's estate tax was defeated by a majority vote.
- North Carolina's estate tax exemption increased to $5.25 million effective January 1, 2013. Nonetheless, in 2012 state legislators considered repealing the North Carolina estate tax but this did not happen, which has resulted in a new push to repeal the tax in 2013.
- Ilinois' estate tax exemption increased to $3.5 million effective January 1, 2012, and to $4 million effective January 1, 2013.
- Maine's estate tax exemption increased to $2 million on January 1, 2013.
- Tennessee's estate tax exemption increased from $1,000,000 in 2012 to $1,250,000 in 2013 and the tax will be completely phased out by 2016.
- In 2012 legislation was passed that would have phased out Indiana's inheritance tax by 2022. In addition, the inheritance tax exemption was increased from $100,000 to $250,000 for certain family members effective January 1, 2012. Nonetheless, in May 2013 Indiana's inheritance tax was repealed retroactively to January 1, 2013, thereby allowing Indiana to join the list of states below.
List of States That Do Not Collect State Estate Taxes or Inheritance Taxes in 2013
Here is the list of the jurisdictions that do not impose a state estate tax or a state inheritance tax as of January 1, 2013:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Florida
- Georgia
- Idaho
- Indiana
- Kansas
- Louisiana
- Michigan
- Mississippi
- Missouri
- Montana
- Nevada
- New Hampshire
- New Mexico
- North Dakota
- Ohio
- Oklahoma
- South Carolina
- South Dakota
- Texas
- Utah
- Virginia
- West Virginia
- Wisconsin
- Wyoming
For a list of the states that currently collect a state estate tax and their current exemption amounts, refer to the State Estate Tax and Exemption Chart.
For an overview of state inheritance tax laws, refer to the State Inheritance Tax Chart.
