"In addition to the federal
estate tax, with a top rate of 40 percent, 12 states and
the District of Columbia impose additional estate taxes, while six states levy inheritance taxes.
Maryland is the only state that imposes both an estate and an
inheritance tax.
Estate taxes are paid by a decedent’s estate before assets are distributed to heirs and are thus imposed on the overall value of the estate. Inheritance taxes are remitted by the recipient of a bequest and are thus based on the amount distributed to each beneficiary.
Most estate and inheritance taxes are progressive, with the
tax on a decedent’s estate or a beneficiary’s inheritance exposed to rates that increase with the total value of assets.
Hawaii and
Washington have the highest top marginal estate tax rate at 20 percent, assessed on estates valued at $15.49 million and $9 million, respectively. Seven other states and the District of Columbia assess a 16 percent top marginal estate tax rate on estates valued between $2 million (
Massachusetts) and $10.04 million (
Illinois).
Connecticut is the only state with a flat estate tax rate of 12 percent. Combined with its high exemption value of $13.61 million, Connecticut has a well-structured estate tax that makes it suitable for possible reforms and eventual elimination.
Likewise,
Iowa has the lowest inheritance tax rate in the nation at 2 percent, while
Kentucky and
New Jersey have the highest top marginal inheritance tax rate of 16 percent as of January 1, 2024."
---------------------------------------------------------------------
Unfortunately, I reside in one of the states that has the lowest STATE estate tax exemption, as well as one of the two states that has the highest top marginal estate tax rate (according to the above info). So, the Feds get you at 40% over the exemption and some States get you too! Just glad my State does not also have an inheritance tax like Maryland, which has both.