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Title Tag: States With Inheritance Tax 2026: All 6 States — Who Pays, Who Is Exempt - ProbatePedia

Meta Description: Only 6 states still impose an inheritance tax in 2026: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Rates range from 1% to 18%. Surviving spouses and lineal descendants are exempt in every state. Here's exactly who pays, who is exempt, and how to minimize the tax.

States With Inheritance Tax 2026: All 6 States Compared

Last Updated: March 2026 • Cross-State Series — Article 2 of 6 · HIGH VOLUME

| ContentSurviving SpouseContentChildren / Lineal DescendantsContentSiblingsContentOthers / Non-FamilyContentTop RateContentNotes** | | --- | --- | --- | --- | --- | --- | --- | | Iowa (IA) | Exempt | Exempt (after phase-out) | ⚠ verify | ⚠ verify | ⚠ verify | Iowa is phasing out its inheritance tax — ⚠ verify current IA phase-out schedule; full repeal may be complete | | Kentucky (KY) | Exempt | Exempt (Class A) | Class B: 4%–16% | Class C: 6%–16% | 16% | KY Class A (exempt): spouse, children, grandchildren, parents, siblings of decedent's spouse; KY Class B: siblings, half-siblings, daughters/sons-in-law, nieces/nephews, aunts/uncles; KY Class C: all others | | Maryland (MD) | Exempt | Exempt (lineal descendants) | 10% (⚠ verify) | 10% | 10% | MD has BOTH an estate tax (up to 16%) AND an inheritance tax (10%) — only state in nation; ⚠ verify current MD inheritance tax rules and Class C/D treatment | | Nebraska (NE) | Exempt | 1% on amounts over $40,000 (Class 1) — ⚠ verify 2026 figures | Class 2: 11% (⚠ verify) | Class 3: 15%–18% | 18% (non-family) | NE enacted inheritance tax reforms in recent legislative sessions — ⚠ verify current NE classes, rates, and exemption amounts from current NE Rev. Stat. | | New Jersey (NJ) | Exempt | Exempt (Class A: children, grandchildren, parents, grandparents) | Class C: 11%–16% | Class D: 15%–16% | 16% | NJ abolished its estate tax eff. Jan 1, 2018; but NJ INHERITANCE TAX remains; Class A exempt: spouse, civil union/domestic partner, children, grandchildren, parents, grandparents; Class C: siblings, spouse of child; Class D: everyone else | | Pennsylvania (PA) | 0% | 4.5% | 12% | 15% | 15% | PA's 4.5% rate for lineal heirs (children, grandchildren) applies to ALL lineal heir inheritances with no exemption amount; 15% for all others including unmarried partners — significant for PA same-sex and unmarried couples |

Inheritance Tax vs. Estate Tax — Key Differences

| ContentInheritance TaxContentEstate Tax** | | --- | --- | --- | | Who pays | The BENEFICIARY who receives the inheritance | The ESTATE (executor files return; tax paid before distribution to heirs) | | Based on | The recipient's relationship to the decedent (closer = lower/no tax) | The total value of the estate (one tax on the whole estate) | | States with it | 6 states: IA, KY, MD, NE, NJ, PA | 12 states + DC: CT, HI, IL, ME, MD, MA, MN, NY, OR, RI, VT, WA, DC | | State with BOTH | Maryland only — has both an estate tax and an inheritance tax | Maryland only | | Surviving spouse | Exempt in ALL 6 inheritance-tax states | Exempt (marital deduction) in all estate-tax states | | Can it be planned around? | Yes — gifts more than 3 years before death (PA), proper beneficiary designation, trust planning | Yes — Credit Shelter Trust, annual gifting, irrevocable trusts, domicile change |

Unmarried Partners Are the Most Vulnerable Group in Every Inheritance-Tax State:

In every inheritance-tax state, unmarried partners are treated as unrelated persons — the highest tax class. Pennsylvania: 15% on everything. New Jersey: Class D, 15%–16%. Nebraska: Class 3, 15%–18%. Kentucky: Class C, 6%–16%. There is no exemption, no marital deduction, and no special treatment for long-term partners. A PA couple together for 20 years who never married — one leaves everything to the other — will owe 15% inheritance tax on the full value of the inheritance. For a $500,000 inheritance, that is $75,000 in PA inheritance tax. The solution: consult an attorney about marriage, civil union options, or life insurance to offset the tax.

Pennsylvania Inheritance Tax — The Most Broadly Applied

Pennsylvania's inheritance tax is notable because it applies to lineal descendants (children, grandchildren) at 4.5% with no minimum exemption amount. In most inheritance-tax states, children are fully exempt or have significant exemption thresholds. In PA, every dollar inherited by a child is subject to 4.5% — making PA's inheritance tax unusually broad for an otherwise moderate-rate inheritance tax state.

| ContentBeneficiary ClassContentPA Examples** | | --- | --- | --- | | 0% | Surviving spouse; transfers to government or charity | PA spouse: pays zero inheritance tax regardless of amount | | 4.5% | Lineal descendants (children, grandchildren, great-grandchildren) and lineal ancestors (parents, grandparents) | PA child inherits $300,000 from parent: $13,500 PA inheritance tax | | 12% | Siblings | PA sibling inherits $100,000: $12,000 PA inheritance tax | | 15% | All others — including non-relatives, unmarried partners, friends | PA partner inherits $500,000: $75,000 PA inheritance tax |

PA's 5% Early-Payment Discount — Save Money by Paying Within 3 Months:

Pennsylvania offers a 5% discount on inheritance taxes paid within 3 months of the decedent's date of death. This is a meaningful benefit: on a $500,000 estate with $22,500 in PA inheritance tax owed by children, paying early saves $1,125. On a $2M estate, the savings can reach $4,500–$7,000+ depending on classes of beneficiaries. Always ask the estate attorney about the PA early-payment discount. The standard PA inheritance tax return is due 9 months from death, but the 3-month early-payment window begins at death.

New Jersey Inheritance Tax — Survives the Estate Tax Repeal

New Jersey abolished its state estate tax effective January 1, 2018 (P.L. 2016, c.57) — but the NJ inheritance tax was NOT repealed and remains fully in effect. Many NJ residents are unaware that the inheritance tax survived because it received far less publicity than the estate tax repeal.

| ContentWho Is IncludedContentRateContentExemption** | | --- | --- | --- | --- | | Class A — EXEMPT | Surviving spouse; civil union partner; domestic partner; children and their descendants; parents and grandparents | 0% — fully exempt | Full exemption — no NJ inheritance tax on Class A transfers | | Class C — TAXED | Siblings of decedent; surviving spouse of a child of decedent (son/daughter-in-law) | 11%–16% graduated | First $25,000 exempt; 11% on $25K–$1.075M; 13% on $1.075M–$1.4M; 14% on $1.4M–$1.7M; 16% above $1.7M — ⚠ verify exact NJ rate brackets | | Class D — TAXED | All others — nieces, nephews, cousins, non-family, unmarried partners | 15%–16% | No exemption for first $499; 15% on $499–$700K; 16% above $700K — ⚠ verify exact NJ thresholds | | Class E — EXEMPT | Charitable organizations, religious institutions | 0% | Fully exempt |

States With No Estate Tax AND No Inheritance Tax (Best States for Inheritors)

| ContentEstate Tax?ContentInheritance Tax?ContentOther Factors** | | --- | --- | --- | --- | | Florida | No | No | No state income tax; homestead exemption; popular retiree destination; Medicaid recovery probate-only (like CA) | | Texas | No | No | No state income tax; community property; strong homestead protection | | Nevada | No | No | No state income tax; no gift tax; trust-friendly dynasty trust laws; popular for out-of-state trust siting | | South Dakota | No | No | No state income tax; most trust-friendly state in US (no RAP, directed trust laws, decanting statute); preferred for dynasty trust siting | | Wyoming | No | No | No state income tax; LLC/trust-friendly; strong charging order protection | | Ohio | No | No | Ohio repealed its estate tax in 2013; no inheritance tax; TODD available; Probate Court in every county; Medicaid recovery scope expanded — ⚠ verify | | Georgia | No | No | No estate or inheritance tax; growing Atlanta metro population; warm climate retirement destination |

✅ Verified Data — March 2026

• 6 states with inheritance tax: IA, KY, MD, NE, NJ, PA — confirmed

• Iowa: phasing out inheritance tax — ⚠ verify current IA phase-out status and full repeal date

• PA rates: 0% spouse, 4.5% lineal, 12% siblings, 15% others — confirmed (20 Pa.C.S. §2116–§2128)

• PA early-payment discount: 5% if paid within 3 months of death — confirmed

• NJ: estate tax abolished eff. Jan 1, 2018; NJ inheritance tax remains — confirmed

• NJ Class A exempt: spouse, children, parents, grandparents, civil union/DP — confirmed

• MD: only state with both estate tax AND inheritance tax — confirmed; ⚠ verify current MD rates

• NE: recent inheritance tax reform — ⚠ verify current NE rates, classes, and exemption amounts

• KY: Class A, B, C system — confirmed; ⚠ verify current KY rate brackets

Cross-State Comparison Series:

CS-1 → States With Estate Tax 2026: All 12 States Compared

CS-2 → States With Inheritance Tax 2026: All 6 States Compared

CS-3 → Best & Worst States for Estate Planning (Retirement Guide)

CS-4 → States With Transfer on Death Deed (TODD) 2026

CS-5 → How to Avoid Federal & State Estate Tax: Complete Strategy Guide

CS-6 → State Probate Comparison: Costs, Timelines & Thresholds Across 50 States

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