Which States Have No Inheritance Tax?

An inheritance tax is a state-level tax imposed on a beneficiary who receives money or property from the estate of a deceased person. The responsibility for paying this tax falls directly on the heir, not the estate itself. This tax is determined by the value of the assets received and, most significantly, the relationship between the beneficiary and the decedent. While the federal government does not levy an inheritance tax, a handful of states do. Understanding which states impose this tax and how it functions is a component of managing financial legacies.

List of States With No Inheritance Tax

In most of the country, beneficiaries can receive assets from a deceased person’s estate without any state tax liability based on the inheritance itself. The states that do not have an inheritance tax include:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Kansas
• Louisiana
• Maine
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nevada
• New Hampshire
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

How Inheritance Tax Works

In the states that levy an inheritance tax, the amount owed by a beneficiary is directly tied to their relationship with the person who has passed away. State laws create different classes of heirs, with each class having its own exemption amounts and tax rates. Close relatives, such as surviving spouses, children, and sometimes parents, are typically classified as Class A beneficiaries and are often completely exempt from the tax.

Other relatives, like siblings, nieces, and nephews, are usually placed in a different class that may have a small exemption amount and a relatively low tax rate. For example, a sibling might receive a $1,000 exemption and pay a tax rate of 4-16% on the value of the inheritance above that amount. Beneficiaries who are more distantly related or entirely unrelated, such as cousins or friends, fall into a category with the highest tax rates and the smallest, if any, exemptions. The tax is calculated on the net value of the property received by each individual heir and the return, often called an inheritance tax return, is filed with the state’s department of revenue.

The Difference Between Inheritance and Estate Taxes

A common point of confusion is the distinction between an inheritance tax and an estate tax. An inheritance tax is paid by the person receiving the assets. In contrast, an estate tax is levied on the total value of a decedent’s entire estate before any distributions are made to beneficiaries. The estate itself is responsible for paying this tax.

The federal government imposes an estate tax, but only on very large estates. For 2025, the federal estate tax exemption is $13.99 million per individual, meaning an estate’s value must exceed this amount before any federal tax is due. A separate group of states also imposes its own state-level estate tax, which typically has a much lower exemption amount than the federal one. The states with their own estate tax are Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington, plus the District of Columbia.

Determining Which State’s Law Applies

The question of which state’s inheritance tax laws apply is determined by the decedent’s legal residence, or domicile, at the time of their death. If a person was a legal resident of a state that does not have an inheritance tax, their intangible personal property, such as bank accounts, stocks, and bonds, will not be subject to an inheritance tax, regardless of where the beneficiaries live.

A significant exception to this rule applies to real estate and tangible personal property, like vehicles or art. These assets are governed by the tax laws of the state in which they are physically located. For instance, if a person lived their entire life in Florida, a state with no inheritance tax, but owned a vacation home in Pennsylvania, a state with an inheritance tax, the beneficiaries of that vacation home would be subject to Pennsylvania’s inheritance tax on the value of that specific property.