What states have inheritance tax is a common question in 2026 as Americans plan estates, review wills, and respond to changing state tax laws. As of today, only a small number of U.S. states still impose an inheritance tax, and recent repeals have significantly narrowed the list.
This article provides a fully factual, current, and U.S.-focused explanation of inheritance taxes, which states still levy them, how they work, and what families should understand right now.
Table of Contents
Inheritance Tax vs. Estate Tax: A Quick Clarification
An inheritance tax is paid by the person who receives property from someone who has died. This differs from an estate tax, which is paid by the estate itself before assets are distributed.
Only a few states still tax inheritances. Most states have eliminated this tax entirely.
Understanding the difference matters because many Americans confuse the two and assume they apply nationwide.
How Many States Still Have an Inheritance Tax in 2026
As of today, only four states in the U.S. impose an inheritance tax.
Those states are:
- Pennsylvania
- Kentucky
- Nebraska
- Maryland
No other state currently taxes inheritances. Recent repeals have reduced this list in the last decade.
Pennsylvania Inheritance Tax Explained
Pennsylvania maintains one of the most structured inheritance tax systems in the country.
The tax rate depends on the beneficiary’s relationship to the deceased.
Pennsylvania inheritance tax rates:
- Spouse: 0%
- Children and grandchildren: 4.5%
- Siblings: 12%
- All other heirs: 15%
The tax applies to most assets, including real estate and financial accounts. Transfers to surviving spouses are fully exempt.
Kentucky Inheritance Tax Structure
Kentucky uses a class-based system that determines who pays inheritance tax and how much.
Heirs fall into three categories:
- Class A: Closest relatives
- Class B: Extended family members
- Class C: Unrelated beneficiaries
Key Kentucky rules:
- Class A heirs pay no inheritance tax
- Class B heirs receive a $1,000 exemption
- Class C heirs receive a $500 exemption
Tax rates range from 4% to 16%, depending on the inheritance amount and heir class.
Nebraska’s County-Level Inheritance Tax
Nebraska’s inheritance tax operates at the county level, not the state level. This makes it unique among inheritance tax states.
Recent law changes have reduced the burden for close relatives.
Current Nebraska rules include:
- Immediate relatives are exempt
- Remote relatives have a $40,000 exemption
- Other heirs have a $15,000 exemption
Tax rates can reach up to 11% for remote relatives and up to 18% for unrelated beneficiaries.
Maryland’s Inheritance Tax Rules
Maryland is the only state that applies both an estate tax and an inheritance tax, though not to the same people in most cases.
Maryland’s inheritance tax applies only to certain heirs.
Maryland exemptions include:
- Spouses
- Children and grandchildren
- Parents
All other beneficiaries generally pay a 10% inheritance tax on the value they receive.
States That Recently Eliminated Inheritance Tax
Several states once taxed inheritances but no longer do.
Most notably:
- Iowa fully repealed its inheritance tax as of January 1, 2025
- New Jersey eliminated its inheritance tax earlier
- Indiana repealed its inheritance tax years ago
As of 2026, no additional states have announced new inheritance taxes.
Why Only a Few States Still Use Inheritance Tax
Inheritance taxes are often politically unpopular. Many lawmakers argue they discourage saving and complicate estate planning.
Over time, most states have chosen to repeal these taxes to:
- Retain retirees
- Simplify tax systems
- Encourage in-state wealth transfers
The remaining states rely on inheritance tax revenue for specific budget needs.
Who Actually Pays the Inheritance Tax
The person receiving the inheritance pays the tax, not the estate.
This means:
- Different heirs can pay different rates
- Some beneficiaries owe nothing
- Others may owe significant amounts
Payment deadlines vary by state and can affect how quickly assets are distributed.
Assets Commonly Subject to Inheritance Tax
Inheritance tax often applies to:
- Real estate
- Bank and investment accounts
- Personal property of value
- Business interests
Life insurance proceeds may be exempt in some states, depending on beneficiary structure.
How Residency Affects Inheritance Tax
Inheritance tax laws depend primarily on where the deceased lived, not where the heir lives.
For example:
- An heir living in Texas may still owe inheritance tax on property from Pennsylvania
- Real estate is usually taxed by the state where it is located
This makes multi-state estate planning especially important.
Federal Inheritance Tax Status
The United States does not have a federal inheritance tax.
Federal law only applies to estate taxes at very high asset levels. Most Americans do not owe federal estate tax, and no federal inheritance tax exists.
State laws operate entirely separately.
Planning Considerations for Families
Families dealing with inheritance tax states often plan ahead to reduce tax exposure.
Common strategies include:
- Gifting assets during life
- Structuring beneficiary designations carefully
- Using trusts where appropriate
Professional guidance is often used due to state-specific rules.
Common Misunderstandings About Inheritance Tax
Several myths persist:
- Inheritance tax applies in all states
- Spouses always pay inheritance tax
- The estate pays the tax
None of these are universally true.
Only a handful of states impose this tax, and many close relatives are exempt.
Why This Topic Matters in 2026
As Americans age and wealth transfers increase, understanding state inheritance taxes becomes more important.
With fewer states taxing inheritances, location now plays a larger role than ever in estate outcomes.
This makes clear information essential for families planning ahead.
Quick Reference: States With Inheritance Tax
| State | Inheritance Tax? |
|---|---|
| Pennsylvania | Yes |
| Kentucky | Yes |
| Nebraska | Yes |
| Maryland | Yes |
| All others | No |
This list reflects the most current confirmed status as of today.
Looking Ahead
No additional states have announced plans to introduce inheritance taxes. Policy trends suggest continued stability rather than expansion.
However, tax laws can change, and families should stay informed.
Have questions about inheritance tax laws in your state or personal experience navigating them? Share your thoughts and stay updated as policies evolve.
