Does Utah Have an Inheritance or Estate Tax?

Utah does not impose an inheritance tax on its residents. This means that if you are a beneficiary receiving assets from a person who died in Utah, the state will not tax your inheritance. The transfer of property, whether it is cash, real estate, or securities, from the deceased to an heir is not a taxable event at the state level.

Utah’s Stance on Inheritance and Estate Taxes

An inheritance tax is paid by a person who receives money or property from a deceased individual’s estate. In contrast, an estate tax is levied on the total value of a deceased person’s assets before distribution. Utah does not impose either an inheritance tax or a separate state-level estate tax, so the entire value of an estate can pass to heirs without state death taxes.

The absence of these taxes means that executors and beneficiaries do not need to file specific state death tax returns or worry about state-level tax liabilities. The focus can remain on the administration of the estate and the distribution of assets according to the decedent’s will or state intestacy laws.

Applicability of the Federal Estate Tax

Even without a state-level tax in Utah, the federal government imposes its own estate tax. This tax only affects a very small percentage of the population due to a high exemption amount. For 2025, an estate is subject to the federal estate tax only if its total value exceeds $13.99 million. This amount is indexed for inflation.

The federal estate tax is paid by the estate itself, not the individual beneficiaries, before assets are distributed. The tax applies to the value of the estate over the exemption threshold, with a top tax rate of 40%. A federal estate tax return is only required if an estate’s value surpasses this multi-million dollar figure.

Income Tax on Inherited Assets

While Utah does not tax the act of inheriting assets, any future income generated by those assets is subject to income tax. For example, if you inherit a rental property, the rental income you collect must be reported on your personal income tax return and is taxable.

A common scenario involves inherited retirement accounts, such as a traditional 401(k) or IRA. The money in these accounts has typically not been taxed. When a beneficiary takes a distribution from an inherited traditional retirement account, that distribution is generally considered taxable income to the beneficiary in the year the money is withdrawn. This is different from inheriting a savings account, where the principal is received tax-free, but any subsequent interest earned is taxable.