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How are inheritance tax rates different in every state?

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As of 2015, only six states have an inheritance tax, which taxes heirs based on their relationships to the deceased. Tax rates range from 0 to 10 percent in Maryland; from 0 to 15 percent in Iowa and Pennsylvania; from 0 to 16 percent in Kentucky and New Jersey; and from 0 to 18 percent in Nebraska. Maryland and New Jersey also tax the deceased's estate before it is distributed to the heirs.

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In all six states, the spouse of the deceased is 100 percent exempt from paying estate taxes. In Iowa, lineal ascendants and descendants are also 100 percent exempt. A brother, sister, son-in-law or daughter-in-law pays from 5 to 10 percent tax, and everybody else pays between 10 and 15 percent tax.

In Kentucky, parents, children, grandchildren, brothers and sisters are exempt. Nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles and great grandchildren pay from 4 to 16 percent tax after a $1,000 exemption. Everyone else pays between 6 and 16 percent tax after a $500 exemption. In Maryland, parents, siblings, children and their spouses and children are exempt. Everyone else pays 10 percent tax.

In Nebraska, siblings and all lineal ascendants and descendants pay 1 percent tax on amounts over $40,000. Other relatives pay 13 percent tax on amounts in excess of $15,000. Everyone else pays 18 percent tax on amounts exceeding $10,000.

In New Jersey, parents, grandparents, children, stepchildren and grandchildren, but not stepgrandchildren, are exempt. Brothers, sisters and spouses of children pay from 11 to 16 percent tax after a $25,000 exemption. Everyone else pays from 15 to 16 percent on the total amount.

Only a spouse has an exemption in Pennsylvania. Lineal ascendants, lineal descendants and spouses of children pay 4.5 percent tax. Siblings pay 12 percent tax. Everybody else pays 15 percent tax.

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