In the United States, estate taxes are not just a federal matter; several states impose their own estate taxes independent of federal regulations. Currently, twelve states have their own estate tax. Understanding these state-specific taxes is crucial for effective estate planning. This guide provides a concise overview of the states with their own estate tax and their respective exemptions. Additionally, it highlights the concept of portability, a feature present in some state estate taxes.
Key Points:
- Twelve U.S. states have their own estate taxes with varying exemption amounts, which are crucial for estate planning.
- Portability in estate tax, allowing a surviving spouse to utilize the unused portion of their deceased spouse's exemption, is available only in Hawaii and Maryland.
- Understanding both federal and state estate taxes, and features like portability, is essential for effective estate and legacy planning.
What is Portability?
Portability in estate tax allows a surviving spouse to use any unused portion of their deceased spouse's estate tax exemption. Essentially, if one spouse does not use the full exemption amount, the surviving spouse can apply the remaining amount to their own estate, potentially reducing or eliminating estate tax liability.
State Estate Tax Exemptions and Portability
The following table outlines the twelve states with their estate taxes, their exemptions, and notes on portability:
| State | 2024 Estate Tax Exemption | Portability |
|---|---|---|
| Connecticut | $12,920,000 | No |
| District of Columbia | $4,528,800 | No |
| Hawaii | $5,490,000 | Yes |
| Illinois | $4,000,000 | No |
| Maine | Indexed to Federal | No |
| Maryland | Indexed to Federal | Yes |
| Massachusetts | $1,000,000 | No |
| Minnesota | Indexed to Federal | No |
| New York | Indexed to Federal | No |
| Oregon | $1,000,000 | No |
| Rhode Island | $1,595,156 | No |
| Vermont | $2,750,000 | No |
| Washington | $2,193,000 | No |
Note: The exemption amounts are subject to change and should be verified for the current year.
Conclusion
Understanding the specifics of state estate taxes, including the concept of portability, is vital for effective estate planning. It's important to consult with an estate planning professional familiar with the laws of your state to optimize your estate planning strategy.
