The best states to die in for tax purposes are the 34 that impose no estate tax, no inheritance tax, and no other death tax on wealth transfers. The worst are the 12 states and the District of Columbia that levy an estate tax, plus the five that levy an inheritance tax, with Maryland uniquely imposing both. Where you are legally domiciled at death can be the difference between your heirs owing nothing and your estate writing a six-figure check to a state tax authority.
The 34 States With No Death Tax
If you die as a domiciliary of any of these states, your estate deals only with federal transfer taxes:
- Alabama, Alaska, Arizona, Arkansas, California, Colorado
- Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas
- Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota
- Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas
- Utah, Virginia, West Virginia, Wisconsin, Wyoming
Iowa joined this group in 2025 after finishing a multi-year phaseout of its inheritance tax. The repeal applies to anyone who died on or after January 1, 2025.1Iowa Legislature. Iowa Code 450.98 – Tax Repealed
No state estate tax return has to be filed, no state audit can be triggered, and your executor avoids an entire layer of compliance. This is why high-net-worth retirees have been relocating to Florida, Texas, and Nevada for decades.
Why the Federal Exemption Doesn’t Protect You
The federal estate tax exemption for 2026 is $15 million per individual, or $30 million for a married couple using portability.2Office of the Law Revision Counsel. 26 US Code 2010 – Unified Credit Against Estate Tax The One, Big, Beautiful Bill Act set this threshold, replacing the temporary provisions of the 2017 Tax Cuts and Jobs Act, with annual inflation adjustments starting in 2027.3Internal Revenue Service. What’s New – Estate and Gift Tax Anything above the exemption is taxed at 40%.
That $15 million shield eliminates federal estate tax for almost everyone. It also creates a false sense of security. State exemptions operate independently and run dramatically lower. Oregon starts taxing at $1 million. Massachusetts starts at $2 million. An estate worth $4 million in either state owes nothing to the IRS but can face a meaningful state bill. Two separate gates; passing through one doesn’t open the other.
The 12 States and DC That Impose an Estate Tax
An estate tax is assessed against the total value of the deceased person’s assets, minus debts and administrative costs. If the net value exceeds the state’s exemption, the estate itself pays the tax before anything reaches heirs.
Here are the 2026 exemption thresholds, from lowest to highest:
- Oregon: $1,000,000 (top rate 16%)
- Rhode Island: approximately $1,774,583 (top rate 16%)
- Massachusetts: $2,000,000 (top rate 16%)4Mass.gov. Massachusetts Estate Tax Guide
- Minnesota: $3,000,000 (top rate 16%)
- Washington: $3,076,000 (top rate 20%)5Washington Department of Revenue. Estate Tax
- Illinois: $4,000,000 (top rate 16%)
- District of Columbia: approximately $4,716,000 (top rate 16%)
- Maryland: $5,000,000 (top rate 16%)
- Vermont: $5,000,000 (top rate 16%)
- Hawaii: $5,490,000 (top rate 20%)6The American College of Trust and Estate Counsel. State Death Tax Chart
- Maine: $6,800,000 (top rate 12%)
- New York: $7,350,000 (top rate 16%)7New York State Department of Taxation and Finance. Estate Tax
- Connecticut: $15,000,000 (flat rate 12%)
Most of these states use a progressive rate structure, starting around 0.8% on the first taxable dollars above the exemption and climbing. The top rate in most is 16%. Hawaii and Washington are outliers at 20%. Connecticut matches the federal exemption at $15 million, so its estate tax only touches estates that would owe federal tax too. Maine caps its top rate at 12%, making it the gentlest among estate tax states for the largest estates.
Tax is calculated on the amount above the exemption, with one important exception.
New York’s Estate Tax Cliff
New York has a rule that catches estate planners off guard. If your estate exceeds 105% of the exemption amount, the exemption disappears entirely and the state taxes your whole estate from dollar one. For 2026, the cliff kicks in at roughly $7,717,500.7New York State Department of Taxation and Finance. Estate Tax An estate worth $7,350,000 owes nothing. An estate worth $7,718,000 could owe more than $700,000. A small increase in value triggers a massive jump in liability. Oregon has a similar structure, though the dollar amounts are much smaller given its $1 million threshold.
State Exemptions Are Not Portable Between Spouses
Federal law lets a surviving spouse inherit the deceased spouse’s unused estate tax exemption, effectively doubling a couple’s combined shield to $30 million. This concept, called portability, generally does not extend to state estate taxes. If you live in a state with a $5 million exemption, each spouse gets $5 million, and the first spouse’s unused exemption vanishes at death unless the estate is structured with trusts to preserve it. Connecticut explicitly bars portability of its state exemption. Couples who assume state exemptions work like the federal one get an unpleasant surprise.
The 5 States That Impose an Inheritance Tax
An inheritance tax works differently. Instead of taxing the estate as a whole, it taxes each beneficiary based on what they receive and how closely they were related to the person who died. Five states impose one:
- Kentucky: 0% to 16%
- Maryland: 0% to 10%
- Nebraska: 0% to 15%
- New Jersey: 0% to 16%
- Pennsylvania: 0% to 15%
Spouses are exempt in all five. Children and parents typically pay the lowest rates or are fully exempt. Siblings face moderate rates. The highest rates hit distant relatives and unrelated beneficiaries like friends or unmarried partners. In Pennsylvania, a surviving spouse pays nothing, a child pays 4.5%, a sibling pays 12%, and everyone else pays 15%.
Maryland is the only state that imposes both an estate tax and an inheritance tax. An estate there can be hit twice: once on the total value above $5 million, and again on individual inheritances based on each beneficiary’s relationship. The estate tax does allow a credit for inheritance taxes paid, which softens the overlap, but the combined burden can still be significant.
The responsibility for paying inheritance tax falls on the person receiving the assets, not the estate itself, though some wills direct the estate to cover it. If the tax goes unpaid, the state can place a lien on inherited property.
Connecticut Also Has a State Gift Tax
Connecticut is the only state that imposes its own gift tax on lifetime transfers. If you’re domiciled in Connecticut and make taxable gifts exceeding the state’s exemption (which mirrors the federal amount), you owe a 12% state gift tax on the excess.8CT.gov. Estate and Gift Tax Information Every other state relies solely on the federal gift tax system. This matters because a common estate planning strategy is to shrink your taxable estate through lifetime gifts. In Connecticut, that strategy carries a state-level cost that doesn’t exist anywhere else.
Moving to a Tax-Friendly State Before Death
Relocating to a state with no death tax can save your estate hundreds of thousands of dollars, but the move has to be real. Buying a vacation home in Florida while keeping your life centered in New York accomplishes nothing for estate tax purposes. Your former state’s tax authority will scrutinize the change, and if it concludes you never genuinely left, it will tax your estate as if you never moved.
Domicile is about intent and action, not just where you sleep most nights. Get a driver’s license in the new state, register your vehicles there, register to vote, and actually vote in local elections. Update your address on bank accounts, brokerage accounts, insurance policies, and your federal tax return. File your state tax return in the new state, or file nothing at all if the new state has no income tax. Move your most important personal possessions, find new doctors and dentists, and join local organizations. Keeping your longtime physician in the old state, leaving furniture and family photos in the old house, and flying back for every holiday gives auditors exactly the ammunition they need to argue you never actually left.
How Former States Fight the Change
Residency audits are common in high-tax states, and auditors verify day counts using cell phone tower records, credit card and ATM transactions, E-ZPass and toll records, airline boarding passes, and calendar entries pulled from email subpoenas. If your phone data contradicts your claimed day count, the state will use that discrepancy.
Many states treat you as a statutory resident if you maintain a “permanent place of abode” there and spend more than 183 days within its borders, regardless of where you claim to be domiciled. New York sets its threshold at 184 days.9New York State Department of Taxation and Finance. Income Tax Definitions Any part of a day spent in the state counts as a full day.
Other red flags include keeping a larger or more valuable home in the old state than in the new one, leaving a spouse or children enrolled in schools there, maintaining professional licenses or business registrations, and holding board meetings or major client relationships in the old state. Retaining a safe deposit box or a country club membership can be cited as evidence of continued ties.
The worst outcome is having two states both claim you were domiciled there at death. When that happens, your estate can face death taxes from both jurisdictions simultaneously. Resolving a dual-domicile dispute typically requires litigation, and the legal costs alone can rival what the estate would have saved by avoiding the tax. If a domicile change is part of your plan, the time to build an airtight paper trail is years before death, not months.