When planning your estate, knowing which states don’t impose inheritance or estate taxes can help you preserve more wealth for your heirs. Below is a list of states that currently have neither inheritance nor estate taxes, making them attractive options for estate planning and wealth transfer.
Understanding the Difference: Inheritance Tax vs. Estate Tax
Inheritance tax is a tax paid by the beneficiary who receives the assets from a deceased person’s estate. The rate and exemptions can vary depending on the relationship between the beneficiary and the deceased. Estate tax, on the other hand, is levied on the entire estate before it is distributed to beneficiaries. Some states impose one, both, or neither of these taxes.
Alabama
Alabama does not impose inheritance or estate taxes, providing a favorable environment for passing assets to heirs without additional state-level taxation.
Alaska
Alaska has no inheritance or estate taxes and also does not have a state income tax, making it highly tax-friendly for residents.
Arizona
In Arizona, neither inheritance nor estate taxes are levied, simplifying estate transfers for families.
California
California does not have estate or inheritance taxes despite its higher income and property taxes, helping residents avoid extra tax burdens upon death.
Colorado
Colorado eliminated its estate tax in 2005 and does not impose an inheritance tax, benefiting estate planning efforts.
Florida
Florida is popular among retirees partly because it does not impose inheritance or estate taxes.
Georgia
Georgia does not have inheritance or estate taxes, making it easier to pass wealth to the next generation.
Idaho
Idaho residents enjoy no inheritance or estate taxes, preserving assets for heirs.
Indiana
Indiana repealed its inheritance tax in 2013 and does not have an estate tax, easing wealth transfers.
Michigan
Michigan imposes no inheritance or estate taxes, allowing beneficiaries to keep more of what they inherit.
Nevada
Nevada has no state income tax, inheritance tax, or estate tax, making it a top choice for residents concerned with taxes.
New Hampshire
New Hampshire does not impose inheritance or estate taxes, though it does tax interest and dividends.
North Carolina
North Carolina repealed its estate tax in 2013 and does not have an inheritance tax.
South Carolina
South Carolina does not impose inheritance or estate taxes, simplifying the inheritance process.
Tennessee
Tennessee eliminated both inheritance and estate taxes in 2016, providing tax relief to residents and their heirs.
Texas
Texas has no inheritance or estate taxes, combined with no state income tax, making it very tax-friendly.
Utah
Utah does not have inheritance or estate taxes, even though it maintains a flat income tax rate.
Virginia
Virginia repealed its estate tax in 2007 and does not have an inheritance tax.
West Virginia
West Virginia repealed both inheritance and estate taxes in 2005.
Wisconsin
Wisconsin does not impose inheritance or estate taxes, allowing families to retain more wealth upon inheritance.
Why Choosing the Right State Matters
Living in a state without inheritance or estate taxes means fewer taxes eating into your assets, which helps preserve wealth for your beneficiaries. Even if you are not subject to federal estate taxes, state taxes can still significantly reduce what heirs receive.
