States Imposing an Inheritance Tax
Six states in the United States have inheritance taxes, including Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Inheritance tax rates and exemptions in these states vary, often based on the relationship between the deceased and the beneficiary. Typically, spouses and close relatives receive more favorable tax treatment compared to distant relatives or unrelated beneficiaries. It’s crucial to understand that inheritance tax differs from estate tax, which is levied on the entire estate before distribution to heirs. Inheritance tax, however, is imposed on the beneficiaries’ receipt of assets.
Residents of states with inheritance taxes should be aware of the specific regulations and rates applicable in their area. Seeking advice from estate planning professionals can help individuals minimize the tax impact on their beneficiaries.