There is no Missouri inheritance tax, and the state collects no estate tax either, so heirs who receive money or property from a Missouri resident owe nothing to Missouri on the inheritance itself. Federal estate tax only reaches estates above $15 million in 2026. The tax problems that actually catch Missouri heirs come from other directions: withdrawals from inherited retirement accounts, capital gains when inherited property is sold, and inheritance taxes owed to another state when the person who died lived somewhere that still imposes one.
Why Missouri Collects Nothing From Heirs
Missouri’s estate tax statute is still on the books but has been inactive since January 1, 2005. The state tax was tied to a credit the IRS once allowed on the federal estate tax return for state death taxes paid. Congress phased that credit out through the Economic Growth and Tax Relief Reconciliation Act of 2001, and once the credit disappeared, Missouri’s tax dropped to zero. Unless Congress brings the credit back, no Missouri estate tax return is required.1Missouri Department of Revenue. Estate Tax – Missouri Estate Tax Filings No Longer Required
Missouri has also never had a separate inheritance tax. The distinction matters in the five states that still charge one: an inheritance tax is billed to the person receiving the assets, not to the estate, and the rate often depends on how closely related the heir was to the deceased. In Missouri, neither the estate nor the heir owes a state-level death tax.
When Federal Estate Tax Applies
The federal estate tax is the only death-related tax that can directly shrink a Missouri inheritance, and it reaches very few families. For deaths in 2026, the exemption is $15 million per person, up from $13.61 million in 2024. The increase came from the One, Big, Beautiful Bill signed into law in July 2025, which extended and raised the basic exclusion amount.2Internal Revenue Service. What’s New – Estate and Gift Tax Anything above $15 million is taxed at rates up to 40%.3Internal Revenue Service. Estate Tax
Married couples can effectively double the shelter through portability. If the first spouse to die does not use the full $15 million exemption, the executor files IRS Form 706 to transfer the unused portion to the surviving spouse. This deceased spousal unused exclusion, or DSUE, lets the surviving spouse’s estate shield up to $30 million in combined assets.4Internal Revenue Service. Instructions for Form 706 Portability is not automatic. Skip the Form 706 filing and the unused exemption disappears, even when the first estate owes no tax.
A related federal levy, the generation-skipping transfer tax, can apply when assets pass to a grandchild or someone more than one generation below the deceased. The GST exemption matches the estate tax exemption at $15 million for 2026, and the rate is also 40%.2Internal Revenue Service. What’s New – Estate and Gift Tax
These federal taxes are paid by the estate before assets reach heirs, so beneficiaries do not receive a separate tax bill. The tax simply reduces what is left to distribute.
Step-Up in Basis on Inherited Property
Selling inherited property is where most Missouri heirs actually run into a tax question, and the rule that governs the answer is the step-up in basis. Under federal law, when you inherit an asset, your cost basis becomes the fair market value on the date the owner died rather than what they originally paid.5Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent Every dollar of appreciation that built up during the original owner’s lifetime is wiped out for tax purposes.
The effect on appreciated real estate is large. If your parent bought a home for $80,000 and it was worth $350,000 when they died, your basis starts at $350,000. Sell soon after inheriting and you owe little or no capital gains tax. Hold the property a few years, sell for $400,000, and you only pay tax on the $50,000 of new appreciation.6Internal Revenue Service. Gifts and Inheritances
If the executor files a federal estate tax return, they can elect an alternate valuation date six months after death. That election only helps when assets have lost value during those six months, because it lowers the estate’s overall tax liability.5Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent For heirs who plan to sell, the stepped-up basis is the single most important number: it determines how much of the sale price is taxable.
Inherited Retirement Accounts
Retirement accounts follow entirely different rules from other inherited property. IRAs and 401(k)s get no step-up in basis, and most non-spouse beneficiaries must empty the account within 10 years of the original owner’s death. The 10-year rule applies to accounts inherited from someone who died in 2020 or later.7Internal Revenue Service. Retirement Topics – Beneficiary
A narrow group of eligible designated beneficiaries can stretch distributions over their own life expectancy instead:
- A surviving spouse, who can also roll the account into their own IRA and delay distributions.
- A minor child of the account owner (not a grandchild). Life-expectancy withdrawals run until the child reaches the age of majority, and then the 10-year clock starts.
- A beneficiary who is disabled or chronically ill.
- A beneficiary no more than 10 years younger than the account owner.
If the original owner had already begun required minimum distributions before death, most non-spouse beneficiaries have to keep taking annual withdrawals and still empty the account by the end of year 10. Missing a required distribution triggers a 25% penalty on the amount that should have come out, though that drops to 10% if you correct the mistake within two years.
Distributions from an inherited traditional IRA count as ordinary taxable income in the year you receive them, so a large IRA emptied over 10 years can push an heir into higher tax brackets. Inherited Roth IRAs still must be emptied within 10 years for most non-spouse beneficiaries, but the withdrawals are generally tax-free because the original owner already paid tax on the contributions.
Inheriting From Someone Who Lived in Another State
Missouri’s rules only govern Missouri residents. If the person who died lived elsewhere, that state’s tax rules can reach a Missouri heir. Five states currently impose an inheritance tax: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Iowa eliminated its inheritance tax effective January 1, 2025.8Tax Foundation. Estate and Inheritance Taxes by State, 2025 The tax is imposed by the decedent’s home state, not the heir’s, so living in Missouri does not protect you.
Rates and exemptions in those states depend heavily on your relationship to the deceased. Spouses are typically exempt. Children and parents often pay a lower rate or nothing. More distant relatives and unrelated beneficiaries face the steepest rates, running roughly 4.5% to 16% depending on the state and the bracket.
A separate concern is real estate. If the deceased owned property in a state that levies its own estate tax (a different tax than an inheritance tax), that state can tax the property even though the owner lived in Missouri. About a dozen states and the District of Columbia impose estate taxes, often with exemptions well below the federal $15 million line. Out-of-state real property may also require ancillary probate in the state where it sits, adding legal fees and time.
Federal and State Filings the Executor Still Has to Make
The absence of a Missouri inheritance tax does not eliminate paperwork. Several federal and state filings can still be required depending on the estate’s size and the income it generates.
Federal Estate Tax Return (Form 706)
Estates with a gross value above $15 million must file IRS Form 706 within nine months of the date of death, with a six-month extension available. The same return is used to elect portability to a surviving spouse, and it must be filed for portability even when no tax is owed.3Internal Revenue Service. Estate Tax The gross estate includes property that passes outside probate, such as life insurance and retirement accounts, so the calculation catches assets an executor might not think of first.
Estate Income Tax Return (Form 1041)
If the estate generates $600 or more in gross income during administration, the executor must file IRS Form 1041. This comes up when rental property keeps producing income, dividends accumulate in investment accounts, or a business continues operating after the owner’s death.9Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1
Final Missouri Income Tax Return
The executor files a final Missouri individual income tax return (Form MO-1040) covering the part of the year the decedent was alive. If a state refund is owed, whoever claims it may need to file Form MO-1310D with the return.10Missouri Department of Revenue. MO-1310D Statement of Person Claiming Refund Due a Deceased Taxpayer Outstanding state or federal income tax obligations have to be settled from estate funds before assets go out to beneficiaries.
Executor Personal Liability for Tax Mistakes
Distributing estate assets before paying federal tax debts creates real exposure for the executor. Under 31 U.S.C. § 3713, a representative who pays any debt of the estate before satisfying amounts owed to the federal government is personally liable to the extent of the improper payment. The IRS can pursue the executor’s own assets to recover what the estate owed.11Office of the Law Revision Counsel. 31 U.S.C. 3713 – Priority of Government Claims
Late or missing returns compound the problem. The IRS failure-to-file penalty is 5% of the unpaid tax for each month a return is late, up to 25%.12Internal Revenue Service. Failure to File Penalty A separate failure-to-pay penalty runs 0.5% per month on any unpaid balance, also capped at 25%. When both apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount so they do not fully stack.13Internal Revenue Service. Failure to Pay Penalty
Willful tax evasion is a felony. A conviction under 26 U.S.C. § 7201 carries fines of up to $100,000 for individuals or $500,000 for corporations, and up to five years in prison.14Office of the Law Revision Counsel. 26 U.S.C. 7201 – Attempt to Evade or Defeat Tax Missouri also enforces penalties and interest on unfiled state income tax returns. Any executor handling more than a simple bank account transfer should get professional tax advice before making distributions.