Which States Have Inheritance Tax? A Detailed Overview

Understanding Exemptions and Rates

Exemptions and how rates apply differ by state and often by the beneficiary’s relationship to the decedent. Official state pages are the authoritative source for those details; below are documented examples and general patterns to help you research further.

• Maryland’s official guidance explicitly lists certain entities that are exempt (for example, state, county, and municipal corporations) — see the Register of Wills tax page for details (Maryland Register of Wills).
• Kentucky’s site clarifies treatment of real property located outside Kentucky — that property is not taxable for Kentucky inheritance tax purposes (KY Department of Revenue).
• Pennsylvania’s page confirms inheritance tax is imposed as a percentage of the transfer value; consult their tables for how that percentage is applied to different classes of beneficiaries (PA Dept. of Revenue).

Common research steps for finding exemptions and rates:

1. Open the state’s inheritance tax page (links above).
2. Look for “rates,” “exemptions,” or “schedules” on that page or linked forms.
3. Check how the state classifies beneficiaries (spouse, child, sibling, unrelated) — classification often determines the rate or exemption level.
4. If rates or exemptions are unclear, contact the state revenue or county probate office listed on the official page.

Because rules change and many details depend on relationship and asset type, verify current exemptions and rate tables on the state website before relying on a specific calculation.

Decision framework (practical checklist and examples)

Use the checklist below to evaluate whether a given inheritance will trigger a state inheritance tax and what action to take. After the checklist, two short, state-specific examples show how an official rule can affect outcomes.

Checklist for beneficiaries and executors

• Identify decedent’s state(s) of residence and any states where real property was owned. If property is in one of the five states above, expect state rules to apply (see the state links in “States with Inheritance Tax”).
• Determine beneficiary class (spouse, child, other relative, non-relative). Classification often affects exemptions and rates—confirm on the state page.
• Locate the state’s inheritance tax return and filing instructions; examine who must file (executor or beneficiary) and what deadlines apply.
• Inventory assets subject to state law (cash, securities, real estate located in-state, certain transfers by operation of law).
• If unclear, contact the state revenue office or a probate attorney before distributing assets.

Two short, sourced examples

• Kentucky real-estate example: If a Kentucky resident owned real property in another state, Kentucky states that the out-of-state real estate is not taxable for Kentucky inheritance tax purposes — this affects which state’s rules to follow when that property transfers (KY Department of Revenue).
• Maryland entity exemption example: Maryland’s Register of Wills notes that state, county, and municipal corporations are exempt from inheritance tax — useful to know if a municipal entity is a named beneficiary (Maryland Register of Wills).

Decision notes and common mistakes

• Mistake: assuming the federal estate tax is the only “death tax.” Action: check state law — five states levy an inheritance tax (linked above).
• Mistake: missing an in-state asset because the decedent was an out-of-state resident. Action: identify property location early and consult the relevant state page.
• When in doubt about filing or payment responsibility, follow the executor’s duties and the state’s guidance; official state pages above are the primary reference.

FAQ

What states have an inheritance tax?

Pennsylvania, New Jersey, Maryland, Nebraska, and Kentucky currently have inheritance tax rules; see each state’s official tax or revenue page for details (,,,, KY).

Who is exempt from paying inheritance tax?

Exemptions depend on state law and beneficiary class. For example, Maryland’s official guidance lists state, county, and municipal corporations as exempt (Maryland Register of Wills). For personal exemptions (spouses, children), check the specific state page linked above.

How is inheritance tax calculated?

Calculation methods vary by state. Pennsylvania’s official page states inheritance tax is imposed as a percentage of the value transferred to beneficiaries; consult the state’s rate schedules and worksheets for the exact computation (PA Dept. of Revenue).

What should I do if I inherit property from a state with an inheritance tax?

First, confirm the decedent’s residency and where property is located, then review that state’s official inheritance tax page for forms and instructions (links above). If questions remain, contact the state revenue office or consult a probate attorney before distributing assets.

Conclusion and Next Steps

Key takeaways: five states impose inheritance tax (Pennsylvania, New Jersey, Maryland, Nebraska, Kentucky); rules, exemptions, and who must file vary by state; official state revenue or probate pages are the authoritative source for rates and forms. Start by checking the specific state page linked earlier and assemble the decedent’s asset list and beneficiary classifications.

Next step (one action): If you’re dealing with an inheritance now, gather the decedent’s residence and asset-location details, then consult the relevant state page from the table above. For a quick primer on estate and inheritance terminology, visit the Finelo Blog for related educational resources: Finelo Blog

Finelo provides financial education, not financial or investment advice.