Most Americans assume that with the federal estate tax exemption now set at $15 million per person (made permanent by the One Big Beautiful Bill Act in 2025), estate tax is only a concern for the ultra-wealthy. But 12 states and Washington DC maintain their own estate taxes with far lower exemptions — some starting as low as $1 million. In states like Oregon and Massachusetts, a family home plus retirement accounts plus life insurance can easily push a modest estate above the taxable threshold.
The critical distinction: federal estate tax exemption ($15 million) and state estate tax exemptions are completely separate. Oregon's $1 million exemption was not raised when the federal exemption increased. Massachusetts' $2 million exemption applies independently. A Massachusetts resident dying with a $3 million estate might owe $0 in federal estate tax — but could owe over $140,000 in Massachusetts estate tax.
This guide covers every state with an estate tax in 2026, their exemption amounts, tax rates, and key planning strategies for residents of high-estate-tax states.
The following 12 states plus Washington DC impose their own estate tax, separate from and in addition to any federal estate tax:
| State | Exemption Amount | Tax Rate Range | Notable Details |
|---|---|---|---|
| Oregon | $1,000,000 | 10% – 16% | Lowest exemption in the US; no inflation adjustment; portability not allowed between spouses |
| Massachusetts | $2,000,000 | 0.8% – 16% | Cliff effect: estates over $2M are taxed on the entire amount, not just the excess (reformed 2023 — now a credit approach) |
| Illinois | $4,000,000 | 0.8% – 16% | Flat $4M exemption; no portability; progressive rates apply to full estate above $4M |
| Washington State | $2,193,000 | 10% – 20% | Highest top rate in US at 20%; exemption indexed for inflation annually |
| Minnesota | $3,000,000 | 13% – 16% | Relatively narrow rate band; portability not available; trusts often used to double exemption |
| Maryland | $5,000,000 | 0.8% – 16% | Unique: Maryland also has inheritance tax; portability of exemption between spouses is available |
| Connecticut | $13,610,000 | 12% | CT mirrors the federal exemption; flat 12% rate; most CT residents will not owe CT estate tax |
| New York | $7,160,000 | 3.06% – 16% | Dangerous cliff: estates more than 105% of the exemption lose the entire exemption; major tax trap |
| Vermont | $5,000,000 | 16% | Flat 16% rate above exemption; no portability; applies to VT residents and property located in VT |
| Maine | $6,800,000 | 8% – 12% | Relatively moderate rates; portability between spouses available since 2022 |
| Hawaii | $5,490,000 | 10% – 20% | Ties Washington State for highest top rate (20%); portability available — doubles exemption for couples |
| Rhode Island | $1,774,583 | 0.8% – 16% | Exemption indexed for inflation annually; progressive rates similar to federal structure |
| Washington DC | $4,254,800 | 11.2% – 16% | Applies to DC residents; exemption indexed for inflation; higher rates than most states |
New York's estate tax has an unusual and dangerous feature known as the "cliff." If your estate exceeds 105% of the New York exemption ($7,160,000 × 105% = $7,518,000), you lose the benefit of the entire exemption. An estate of $7.5 million in New York owes no NY estate tax. An estate of $7.52 million suddenly owes tax on the entire $7.52 million — potentially over $1 million in tax on what is essentially a $20,000 difference in estate value. This cliff effect requires careful planning for New York residents with estates in the $7–8 million range.
The following states have no state-level estate tax: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa (repealed 2021), Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey (repealed 2018), New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee (repealed 2016), Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.
With the federal estate tax exemption at $15 million per person, federal estate tax is not a concern for the vast majority of Americans. But state estate taxes with $1–5 million exemptions affect a much broader population — particularly in high-cost-of-living states where home values alone can approach $1–2 million. A Massachusetts couple with a $2.5 million estate, life insurance, and retirement savings may easily be in state estate tax territory even with no federal exposure.
All states with estate taxes allow an unlimited marital deduction — transfers between spouses are entirely tax-free regardless of amount. However, several states (including Oregon, Minnesota, Illinois, Connecticut, and Vermont) do not offer "portability" of the unused estate tax exemption between spouses. In states without portability, if the first spouse to die has a $3 million estate that passes entirely to the surviving spouse (no tax due to marital deduction), the $1 million Oregon exemption is effectively wasted. Planning with a Credit Shelter Trust (also called a Bypass Trust or Family Trust) can preserve the deceased spouse's exemption in non-portability states.
For residents of Oregon, Massachusetts, or Washington State with estates in the $1–7 million range, relocating to a state without estate tax (Florida, Texas, Nevada, etc.) can eliminate state estate tax entirely. A $3 million Oregon estate would owe approximately $205,000 in Oregon estate tax. Moving to Florida (no estate tax, no income tax) eliminates this liability. For the move to be respected, the taxpayer must genuinely change domicile — establish a permanent home, change their intent to remain, and spend meaningful time in the new state.
Annual gifts of $19,000 per recipient (2026 federal annual exclusion) remove assets from the taxable estate without reducing the lifetime exemption. A couple can give $38,000 per year to each child and grandchild. For a couple with three children and six grandchildren, that is $342,000 per year removed from the estate — meaningful for estates near state exemption thresholds. Direct payments for tuition or medical expenses (paid directly to the institution) are also completely excluded from gift tax and do not count against the annual exclusion.
Life insurance death benefits are included in the taxable estate if the deceased owned the policy. An Irrevocable Life Insurance Trust (ILIT) can hold a life insurance policy outside of the estate, so the death benefit passes to beneficiaries estate-tax-free. This is especially useful in Oregon or Massachusetts where estate tax rates apply at relatively low estate values.
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