Federal taxes on your estate are something of a boogeyman: very few people need to fear them and with the recent reform, they’re even less of a concern.
However, some states have their own estate taxes (12 to be exact, as well as the District of Columbia) and some even have an inheritance tax (thankfully, only six). Let’s take a look and see if a move might be coming to your agenda.
New York looks pretty sanguine at first glance: a high exemption of $5.25 million (set to increase next year), spouses are exempt and there’s no inheritance tax. The estate tax ranges from 3.1% to an uncomfortable 16%. Careful, though: if your estate totals 105% of the threshold, the entire amount is liable to taxation.
Washington state has a relatively low $2.2 million exemption and unusually high estate taxes of 10-20%. Spouses are exempt as usual and there is no inheritance tax. There is an exemption in place that can benefit small family-owned businesses.
Vermont certainly is beautiful, but the exemption level is only $2.75 million with a flat 16% estate tax levied on any amount that exceeds it. The state’s lovely scenery and quaint small towns attract the wealthy, but they pay for it in high state income taxes and a potentially onerous estate levy.
Rhode Island has a dizzyingly low estate tax threshold of only $1.54 million. Only three states nationwide set their limit below $2 million, which isn’t so much, given the cost of homes. The tax rate starts from an indifferent 0.8% and rises to a body-slamming 16%. For a tiny state, it packs a wallop.
For more information, please read:
9 states with the most painful death taxe | Benefit Pro