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States Which Have an Estate Tax

November 6, 2015 By john

There are a number of states which collect estate taxes. Some other states prefer to collect a tax on inheritance instead. There are two states specifically which collect estate tax and inheritance taxes. If you need to know how to plan an estate in your state, here is some information which should prove helpful.EstateTaxPic

Federal Estate Tax

Estate tax occurs at the federal level, but it occurs less often. Typically only those in the highest 1% of the rich will pay federal estate tax. Federal tax to estates only begins when a non-spouse is collecting over $5 million dollars. Spouses are allowed to collect more than the $5 million without paying federal taxes. If your estate will be lower than $5 million, you are in the clear.

Estate Tax States

The states of Delaware, Connecticut, Maine, Minnesota, Massachusetts, Hawaii, Illinois, New Jersey, Maryland, New York, Washington, Vermont, Rhode Island, and the District of Columbia collect estate taxes.

The states of North Carolina and Ohio collected state taxes for deaths prior to the year of 2013. This means that residents have to pay federal and state taxes on the estate only if it is over the federal limit. The state of Tennessee is applying the same rules as North Carolina and Ohio as of 2016.

Inheritance Tax Difference

The difference between estate and inheritance taxes is that the amount collected in inheritance tax cases depends on the degree of relatedness between the person leaving and receiving the property. For instance, property inherited from a mother or father will require more inheritance taxes than property from a distance cousin.

Image credit: StockMonkeys.com

Filed Under: Taxes

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