How Are Inheritance Tax Rates Different in Every State?


Quick Answer

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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Full Answer

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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