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State Inheritance and Estate Taxes

united-states-151582_150California is a big state, and it’s easy to get near-sighted. Because California has no state-specific gift or estate taxes, it’s easy to focus almost exclusively on the federal estate and gift tax exemptions when planning for the taxes due after there’s been a death.

But nineteen states and the District of Columbia levy their own state estate taxes or inheritance taxes, with widely varying exemptions and tax rates, and these taxes can come due, even to California residents–either because they own property located in another state, or because they inherit assets from a resident of a state with an inheritance tax.

If you, for example, own property in a state with an estate tax, like Minnesota, you might find an estate tax bill due as a result.  Estate taxes fall on the estate of the person who died; Minnesota currently exempts property worth up to $1.2 million, then levies a maximum estate tax rate of 16%. So, if your luxury duck blind is valued at more than $1.2 million,  your estate may owe tax on the transfer of that blind at your death.

Alternatively, if you inherit property from a resident of one of the six states that levy an inheritance tax, you may find yourself receiving a bill from that state, even though you don’t live there. If your beloved brother lived in Pennsylvania, for example, and left you an inheritance, you’ll be taxed on it at a rate of 12%.

Forbes publishes an annual round up of state estate and inheritance taxes that provides a clickable map to get the details on particular states.