State Estate and Inheritance Taxes in 2026: Thresholds and Traps

For a death in 2026, the federal estate tax does not reach an estate until it passes a basic exclusion amount of $15,000,000, the IRS confirms. Massachusetts, by contrast, provides a $99,600 credit designed to eliminate its estate tax at $2,000,000 or less; its filing and calculation rules still require a careful state computation. Between those two numbers sit many substantial estates: too modest to interest the IRS, large enough to owe a state. Add a house in a second state, a husband’s estate that passed to you outright, or generous gifts late in life, and the state question may become the only estate-tax question that matters.

This guide explains how the two kinds of state death tax differ, how domicile and the location of real estate decide which states can reach you, why federal portability rarely crosses a state line, and what follows for gifts and trusts. Its threshold comparison is a planning sample, not a national list; it names only states whose rules we confirmed on official state sites in October 2026. Other states levy these taxes too, and figures can change mid-year. Use it to frame questions for your advisers, and confirm each answer with the state revenue department.

An estate tax weighs the estate; an inheritance tax weighs the heir

A state estate tax is levied on the estate and measured by its size. An inheritance tax looks at each recipient, so the same bequest can bear different rates depending on who receives it. Pennsylvania charges 0 percent on transfers to a surviving spouse, 4.5 percent to direct descendants and lineal heirs, 12 percent to siblings, and 15 percent to other heirs. Charities and certain institutions are exempt, as is property owned jointly between spouses.

New Jersey shows the two taxes parting company: it imposes no estate tax for deaths on or after January 1, 2018, but its inheritance tax continues, turning on who the beneficiaries are and how they were related to the decedent, what was owned, and whether the decedent lived in New Jersey. Where the beneficiaries live is not a factor.

Maryland levies both. Its estate tax uses a $5,000,000 exclusion for deaths on or after January 1, 2019. Its inheritance tax, administered by the Register of Wills, is 10 percent on property passing to collateral heirs such as nieces, nephews, and cousins, and to people unrelated by blood; a spouse, children, grandchildren, parents, siblings, and a child’s spouse are exempt. The first tax asks how much you leave. The second asks to whom.

The federal exemption measures the IRS’s interest in your estate, not your state’s.

The 2026 thresholds we could confirm

Against the federal $15,000,000, these are the 2026 figures we verified at the source:

1. New York: a basic exclusion amount of $7,350,000.
2. Maryland: $5,000,000, plus any Maryland unused exclusion from a predeceased spouse.
3. Washington: $3,076,000 for deaths from January 1 through June 30, 2026, and $3,000,000 from July 1, 2026, which the Department of Revenue says is not set to rise.
4. Massachusetts: a credit of up to $99,600 eliminates the tax at $2,000,000 or less; for deaths on or after August 1, 2025, the state calculation removes out-of-state real and tangible property and adds certain Massachusetts QTIP property.
5. District of Columbia: a return is required when the gross estate is $4,988,400 or more for 2026 deaths, according to the Office of Tax and Revenue’s 2026 estate tax instructions.

The measures differ. Washington tests the gross estate, before deductions, and requires a return above its threshold even when no tax is due; Massachusetts tests the taxable estate, after deductions. Rates move as well: Washington’s tables show a top rate of 35 percent for deaths from July 1, 2025 through June 30, 2026, and 20 percent from July 1, 2026. A state return can be due when no federal one is; Does an Estate Need to File Form 706? sets out the federal test.

New York’s threshold is a cliff, not a floor

Exceed most exemptions by a dollar and a dollar is taxed. New York’s instructions for Form ET-706 work differently: the credit shrinks as the taxable estate rises above the basic exclusion and vanishes once the estate reaches 105 percent of the exclusion. Applied to the 2026 exclusion, the full credit ends above $7,350,000 and disappears at $7,717,500. Once it disappears, New York computes tax on the entire New York taxable estate, not merely the amount over $7.35 million.

An estate just over the line can owe far more than its excess, so deductions and the timing of gifts matter most near the threshold. New York also adds back taxable gifts a resident made within three years of death, with exceptions that include real or tangible property located outside the state; the instructions extend the rule to deaths before January 1, 2032. Gifts within the federal annual exclusion, $19,000 per recipient in 2026, are not taxable gifts and fall outside it.

Domicile reaches everything; real estate reaches across borders

Your domicile, the place the law treats as your permanent home, has the widest claim. Pennsylvania’s inheritance tax brochure says it taxes a resident decedent’s stocks, bonds, and bank accounts wherever they are held, but a nonresident’s only real and tangible property located in Pennsylvania.

That second rule brings the summer house into the conversation. Washington requires a return from a nonresident who owns real estate or tangible property there if all assets, wherever located, exceed its threshold. New York requires one if a nonresident’s estate includes New York real or tangible property and the federal gross estate plus includible gifts exceeds the basic exclusion. Massachusetts, under amendments effective August 1, 2025, computes a nonresident’s tax on a base built from Massachusetts real estate and tangible property rather than the whole estate.

To take a hypothetical case, suppose you are domiciled in a state with no estate tax, hold $12 million in securities, and own a $1 million cabin in Washington. You are well below the federal exclusion, yet Washington counts everything you own, so the cabin brings a Washington return into play and its rules for apportioning out-of-state property shape the tax.

Moving is a tax event as well as a life event. Domicile rests on facts, not declarations alone, and a house kept in the old state may stay within its reach. Moving to Another State After Widowhood sets out the sequence.

Portability usually stops at the state line

Federal portability lets you use your husband’s unused federal exclusion if his executor elected it on Form 706; Estate Tax Portability explains how. States are not bound by it. New York’s instructions state that its estate tax law does not conform with the federal portability rule.

Maryland has a version of its own. Its statute adds a Maryland unused exclusion to the $5,000,000, but for a spouse with Maryland ties who died on or after January 1, 2019, only if a timely Maryland return was filed for him with an irrevocable election. If your husband died recently with Maryland ties, raise this with his executor now.

Where a state recognizes no portability, an exemption your husband’s estate did not use is generally gone. A credit shelter trust funded at the first death is one way a plan puts it to work. If everything passed to you outright, your estate has one state exemption, not two.

Gifts, trusts, and titles: what each can and cannot do

Lifetime gifts can shrink a state estate tax, and look-back rules mark their limits. Beyond New York’s three years, Maryland’s inheritance tax reaches a material part of property transferred within two years of death in contemplation of death, other than by bona fide sale, and Pennsylvania taxes the full value, less $3,000, of a joint interest the decedent created within a year of death. A gift of appreciated property also changes the recipient’s income-tax position; ask for that comparison in numbers.

A revocable trust avoids probate, not state tax: Washington counts assets “owned or in trust,” and Maryland’s inheritance tax reaches property the decedent could revoke. Marital trusts can defer tax, but the elections may be state-specific. New York requires its own QTIP election on the New York return for deaths on or after April 1, 2019, and Maryland honors a QTIP election on its return even when the federal election differs.

Title matters too: New Jersey’s nonresident guidance treats a bona fide partnership interest, or stock in a corporation that owns New Jersey real estate, as intangible property outside its nonresident tax. Washington publishes its own guidance on real property held by business entities. An entity is a question for counsel, not a formality.

Deadlines that do not line up

New York and Washington expect the return and payment within nine months of death. New Jersey’s inheritance tax is due within eight months. The District of Columbia allows 10 months; an extension is requested on its own Form FR-77, as the Office of Tax and Revenue does not accept the federal Form 4768 in its place. Pennsylvania’s inheritance tax becomes delinquent at nine months, with a 5 percent discount if paid within three. Keep one calendar; State Taxes After a Death shows how to build the file.

Questions to put to your advisers

1. Which state is my domicile, and what evidence would a revenue department weigh if it disagreed?
2. In which states do I own real estate or tangible property, and does each levy an estate or inheritance tax?
3. Measured each state’s way, how does my estate compare with its 2026 threshold, and how near am I to New York’s cliff?
4. Did my husband’s estate use its state exemption, and if we had Maryland ties, was a timely Maryland return and election filed?
5. Which heirs would owe inheritance tax, and does my will say whether the estate or the heir pays it?
6. Would lifetime gifts reduce my state tax, and do look-back rules or income-tax costs outweigh the saving?
7. Should my trusts or the title to out-of-state property change, and which state elections apply?
8. Who will prepare each state return, and by what date must each be filed and paid?

This article provides general U.S. educational information and is not legal, tax, or estate-planning advice. Confirm current rules with the state revenue department and a qualified professional who knows your facts.