Forty-five states and the District of Columbia have no inheritance tax. Only five states still impose one: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. If the person who died lived anywhere else, you owe no state inheritance tax on what you receive, and you have no state inheritance tax return to file.
The Forty-Five States With No Inheritance Tax
Every state and the District of Columbia falls into the no-tax group except the five named above. Heirs in these jurisdictions don’t file a state inheritance tax return regardless of how much they inherit. The dollar amount doesn’t matter, and the relationship to the person who died doesn’t matter, because the tax simply doesn’t exist there.
The list has been growing. Iowa was the most recent state to eliminate its inheritance tax, phasing it out over several years before fully repealing it for anyone who died on or after January 1, 2025. That repeal is what brought the count to forty-five.
The Five States That Still Impose One
Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania each group heirs into classes by their relationship to the deceased and tax those classes at different rates. Across all five, a surviving spouse pays nothing. Beyond spouses, the exemptions differ enough that it’s worth knowing where you stand if the person who died lived in one of them.
Kentucky
Immediate family is fully exempt: spouse, parents, children, grandchildren, and siblings owe nothing. Nieces, nephews, aunts, uncles, in-laws, and great-grandchildren pay 4% to 16% after a $1,000 exemption. Everyone else pays 6% to 16% after a $500 exemption.
Maryland
Maryland charges a flat 10% but exempts a broad list of close relatives, including spouses, parents, grandparents, children, stepchildren, grandchildren, siblings, in-laws, and registered domestic partners. Nieces, nephews, aunts, uncles, cousins, friends, and unrelated heirs owe 10% on anything over $1,000. Life insurance paid to a named beneficiary other than the estate is exempt. Maryland is also the only state that imposes both an inheritance tax and a separate estate tax, though the inheritance tax paid by beneficiaries is credited against the estate tax.
Nebraska
Nebraska collects the tax at the county level. Spouses pay nothing. Parents, children, grandchildren, siblings, and their spouses pay 1% on amounts over $100,000. Aunts, uncles, nieces, nephews, and their descendants pay 11% on amounts over $40,000. Everyone else pays 15% on amounts over $25,000. Anyone under age 22 who inherits from an immediate or remote relative also owes nothing.
New Jersey
New Jersey’s Class A beneficiaries pay nothing on any amount. That class includes spouses, civil union partners, domestic partners, parents, grandparents, children, stepchildren, grandchildren, and legally adopted children. Siblings and children-in-law get a $25,000 exemption and pay 11% to 16% above it. Friends and distant relatives face 15% to 16% with no meaningful exemption.
Pennsylvania
Pennsylvania is the strictest of the five for lineal heirs. Surviving spouses pay 0%, and parents inheriting from a child age 21 or younger pay 0%. Children and grandchildren pay 4.5%. Siblings pay 12%. Everyone else pays 15%. Charities and government entities are exempt.
When a Tax-Free Home State Doesn’t Protect You
Living in a state with no inheritance tax isn’t always the end of the analysis. Real estate is taxed by the state where it physically sits, no matter where the heir or the deceased person lived. If someone in a tax-free state owned a vacation home in Pennsylvania, the person inheriting that home has to pay Pennsylvania inheritance tax on it.
Financial assets follow a different rule. Bank accounts, stocks, and bonds are generally taxed based on where the deceased was legally domiciled at death, not where the account is held. An heir in New Jersey who inherits a brokerage account from a parent domiciled in Florida owes no state inheritance tax, because Florida doesn’t impose one.
The practical upshot: some heirs end up filing in states they have never lived in. If you’re inheriting real property in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, that state’s rules apply to you even if your own state has no inheritance tax.
Federal Estate Tax Is a Different Thing
“No inheritance tax” doesn’t mean “no tax of any kind on a death transfer.” Inheritance tax is paid by the person receiving assets. Federal estate tax is paid by the estate itself, before assets are distributed. The two can apply at the same time, and they’re calculated separately.
For 2026, the federal estate tax exemption is $15,000,000 per person. Married couples can combine their exemptions through portability, shielding up to $30,000,000. Anything above the exemption faces a top federal rate of 40%. Because the threshold is so high, most estates owe nothing federally, and a federal estate tax return on Form 706 is required only when the gross estate exceeds the filing threshold.
Stepped-Up Basis Also Helps Heirs
A separate federal rule, stepped-up basis, benefits heirs everywhere, tax-free states included. When you inherit property, your cost basis for capital gains purposes resets to the fair market value on the date the owner died, not what they originally paid.
If a parent bought stock for $50,000 and it was worth $200,000 at death, your basis becomes $200,000. Sell it soon after for $200,000 and you owe no capital gains tax. Without the step-up, you’d owe tax on $150,000 of gain. This applies to inherited assets generally, whether or not the estate files a federal estate tax return.
The Short Version
If the person who died lived in any state other than Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, and didn’t own real estate in one of those five, you have no state inheritance tax to worry about. Even in those five, spouses always pay nothing, and children, grandchildren, and parents are fully exempt everywhere except Pennsylvania, where they pay a reduced 4.5%. The heirs who actually pay meaningful inheritance tax are usually friends, distant relatives, or heirs with no family connection to the deceased.