Twelve states and DC impose estate taxes; five levy inheritance taxes

Twelve states and the District of Columbia impose estate taxes and five states levy inheritance taxes, according to the Tax Foundation's 2026 state-by-state tally. Maryland is the only state that imposes both. The federal estate tax has a top marginal rate of 40 percent.

An estate tax is paid by the estate before assets reach heirs, based on the estate's total value. An inheritance tax is paid by the beneficiary, based on the amount received.

Estate taxes typically apply to estates of people who died domiciled in the taxing state, plus nonresident decedents who owned taxable property there. Inheritance taxes are paid to the state where the decedent was domiciled or owned taxable property, regardless of where the heir lives; an out-of-state beneficiary's address does not by itself determine the applicable inheritance-tax state. Most estate taxes and some inheritance taxes are progressive.

Hawaii and Washington share the highest top marginal estate tax rate, 20 percent, but their exemptions sit far apart: $3 million in Washington and $5.49 million in Hawaii. Hawaii's top rate applies to taxable estate values above $10 million; Washington's applies above $9 million. The Tax Foundation calls Washington's tax more burdensome because the lower exemption exposes more estates to taxation and its marginal rates climb faster.

A $4 million estate in Washington sits above the state's $3 million estate-tax exemption; the same estate in Connecticut, where the estate-tax exemption is $15 million, does not. The Tax Foundation's rules turn on two facts for a client with ties to more than one state: where the person is domiciled at death and where they own taxable property.