How much is inheritance tax? It ranges from 1% to 16%, and in most cases it’s zero. Only five states charge the tax in 2026: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Everyone else pays nothing. Even within those five states, spouses are fully exempt and close relatives usually pay little or nothing. What you actually owe depends on which state the person who died lived in, how closely you were related to them, and how much you inherited.
Rates in the Five States That Charge It
Each state sets its own rate schedule, and the top rate you see quoted almost never applies to close family.
- Kentucky: 4% to 16% for non-exempt beneficiaries.
- Maryland: a flat 10% on transfers to collateral heirs and unrelated individuals.
- Nebraska: 1% to 15%, depending on the beneficiary class.
- New Jersey: 11% to 16% for non-exempt beneficiaries.
- Pennsylvania: 4.5% to 15%, depending on your relationship to the deceased.
Maryland and Nebraska use flat rates. Pennsylvania applies one of three flat rates based on the beneficiary class. Kentucky and New Jersey use graduated brackets, meaning different portions of the inheritance are taxed at different rates. In New Jersey, for example, the 16% top rate only reaches the portion of the inheritance above $1,700,000.
Iowa used to charge an inheritance tax but fully repealed it effective January 1, 2025. If you’re inheriting from someone who died on or after that date and lived in Iowa, you owe Iowa nothing. Older articles may still list Iowa; ignore them.
How Your Relationship Changes What You Owe
Your relationship to the person who died is the single biggest factor in your bill. Every taxing state sorts beneficiaries into classes, and the class determines both your rate and how much you can inherit before the rate applies.
Spouses
Surviving spouses are fully exempt in all five states. You owe nothing on assets you inherit from a deceased husband or wife, regardless of value.
Children, Grandchildren, and Parents
Direct family members either pay nothing or pay at the lowest rate. Kentucky, Maryland, and New Jersey exempt them entirely. Nebraska taxes them at 1% above the exemption. Pennsylvania charges 4.5%. Step-children generally receive the same treatment as biological children: Kentucky includes them in its exempt Class A, New Jersey exempts them, and Pennsylvania taxes them at 4.5%.
Siblings
Brothers and sisters fall in the middle. Maryland exempts siblings the same as direct family. Pennsylvania charges them 12%. Kentucky taxes them on the same graduated 4% to 16% schedule that applies to other non-exempt heirs.
Nieces, Nephews, and Other Extended Relatives
Nebraska charges extended relatives 11%. New Jersey taxes this group at 15% to 16%. Kentucky and Pennsylvania fold them into their broader non-exempt rate schedules.
Friends and Unrelated Beneficiaries
Unmarried partners without formal legal status, friends, cousins, and business associates face the highest rates. Pennsylvania charges 15% on transfers to anyone outside the immediate family and sibling categories. Kentucky and New Jersey can reach 16%. Maryland applies its flat 10% to everyone in this group.
Domestic Partners
Treatment varies. Maryland exempts registered domestic partners the same as spouses for deaths on or after October 1, 2023. New Jersey exempts domestic partners and civil union partners. In states without a specific provision, an unmarried partner may be taxed at the highest rate.
Exemptions That Reduce Your Bill
Before any rate applies, you subtract an exemption. The amount depends on the state and your class.
- Kentucky: Class A (spouses, children, parents, siblings) fully exempt. Class B (nieces, nephews, in-laws) $1,000. Class C (everyone else) $500.
- Maryland: Spouses, direct descendants, siblings, and registered domestic partners fully exempt. Everyone else gets $1,000 per person before the flat 10% applies.
- Nebraska: Immediate relatives can inherit up to $100,000 tax-free. Extended relatives get $40,000. Everyone else gets $25,000.
- New Jersey: Spouses, domestic partners, children, parents, and grandparents fully exempt. Siblings and spouses of deceased children get $25,000. Others get no meaningful exemption.
- Pennsylvania: Surviving spouses fully exempt. No dollar exemption for other classes; the rate applies to the full value.
To calculate what you owe, take the fair market value of what you received, subtract your exemption, and apply your rate to what’s left. Charitable donations, certain farmland, and property passing to government entities are also commonly excluded from the tax base.
What If You Live in a Different State
Inheritance tax follows the person who died, not you. If you live in Florida but inherit from someone who lived in Pennsylvania, you owe Pennsylvania inheritance tax. Moving out of a taxing state after receiving an inheritance doesn’t help either; the obligation is fixed by where the deceased was domiciled.
Real estate is the exception. If the deceased lived in a non-taxing state but owned property in a taxing one, that property may be subject to the tax where it sits. A vacation home in New Jersey can trigger New Jersey inheritance tax even if the owner lived in Florida. Bank accounts, investments, and other intangible assets are taxed based on the deceased’s home state.
Deadlines, Discounts, and Late Penalties
Most inheritance tax states require the return to be filed within nine months of the date of death, and the tax is generally due at the same time.1Office of the Law Revision Counsel. 26 USC 6075 – Time for Filing Estate and Gift Tax Returns Nebraska handles its inheritance tax at the county level rather than through a state revenue department.
Two states reward early payment. Pennsylvania gives a 5% discount if you pay within three months of the date of death. Kentucky gives the same 5% discount with a nine-month window. On a $500,000 taxable inheritance at Pennsylvania’s 4.5% rate, the base tax is $22,500 and the discount saves $1,125.
Filing extensions are usually available, but an extension to file is not an extension to pay. Interest starts accruing on unpaid balances after the original due date, and some states add penalties on top. If the estate includes real estate that needs appraisal or sale, contact the state revenue agency early.
Inheritance Tax Is Not the Estate Tax
The two get confused constantly, but they’re different bills paid by different people. An estate tax is paid by the estate itself, out of the total value of everything the deceased owned, before assets reach any heir. The federal estate tax applies only to estates above $15,000,000 in 2026, so it affects very few families.2Internal Revenue Service. What’s New — Estate and Gift Tax Several states also charge their own estate taxes with lower thresholds.
Inheritance tax is paid by each individual beneficiary on what that person received. There is no federal inheritance tax; it exists only at the state level.3Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax Maryland is the only state that imposes both, meaning an estate there can face two separate obligations.