Which States Have Low Inheritance Tax Rates?


Quick Answer

As of 2015, most states don’t levy any inheritance tax, but of the six states that do, Nebraska has the lowest minimum inheritance tax rate at 1 percent, and Maryland has the lowest maximum rate at 10 percent, reports About.com. States base inheritance tax rates that individuals pay on how closely they are related to the decedent, explains Nolo. Spouses, civil union partners and domestic partners generally pay no inheritance taxes, and children who are beneficiaries pay little or nothing.

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Full Answer

In most states that collect inheritance taxes, the amount of the inheritance is not as important as the inheritor’s relationship to the decedent in determining tax rates, according to Nolo. People who live out of state may also have to pay taxes on assets they inherit if the decedent is from a state that levies inheritance taxes. Executors of estates and not individual beneficiaries are responsible for filing inheritance tax returns unless inherited assets do not pass through probate.

In New Jersey and Maryland, inherited assets are subject to both inheritance and estate taxes, explains About.com. These states collect inheritance taxes from individual beneficiaries and estates taxes from overall estates. Additionally, the federal government collects estate taxes from large estates, and some states that do not levy inheritance taxes collect estate taxes.

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