Even though the federal exemption is $15,000,000 (2026), a dozen-plus states and the District of Columbia impose their own estate tax — often with exemptions far below federal, catching estates that owe no federal tax. A separate group of states taxes the recipient through an inheritance tax. State death taxes drive much of the planning for 'moderately wealthy' clients.
Verify current figures
State exemptions and rates change frequently. The figures below reflect 2026 reporting and should be reconfirmed against each state's department of revenue before advising.
As of 2026, 12 states plus the District of Columbia impose an estate tax. Exemptions range widely; Massachusetts and Oregon sit at the low end (about $1,000,000 and $1,000,000 respectively), while Connecticut has risen to match the federal $15,000,000.
| State | Approx. exemption |
|---|---|
| Oregon | $1,000,000 |
| Massachusetts | $2,000,000 |
| Washington | ~$2,193,000 |
| Minnesota | $3,000,000 |
| Illinois | $4,000,000 (see note) |
| Rhode Island | ~$1,774,000 |
| Maryland | $5,000,000 (also has inheritance tax) |
| New York | ~$6,940,000 (cliff) |
| Connecticut | $15,000,000 (matches federal) |
| Also: Hawaii, Maine, Vermont, District of Columbia | Varies |
New York 'cliff'
New York phases out the exemption for estates between 100% and 105% of the threshold — an estate just over the line can be taxed on the ENTIRE amount, not just the excess. Plan around the cliff with bequests or QTIP planning.
Illinois estate tax amended for deaths on/after Jan. 1, 2026
Illinois amended its Estate and Generation-Skipping Transfer Tax Act for decedents dying on or after January 1, 2026, moving to a graduated rate structure. Reporting on whether the $4,000,000 exclusion was retained or increased has been inconsistent, and the Illinois exclusion is not portable between spouses and is not indexed for inflation. Confirm the final enacted exclusion and rate schedule with the Illinois Attorney General / Department of Revenue before advising Illinois clients.
Because Illinois has no portability, married Illinois clients typically still need credit-shelter/marital planning (or a state-only QTIP) to use both spouses' state exclusions — a divergence from the federal portability regime worth flagging to clients.
Key takeaways
- A dozen-plus states plus D.C. tax estates, often with sub-federal exemptions; five states impose an inheritance tax.
- New York's cliff can tax the whole estate; many states lack portability, so credit-shelter/state-QTIP planning persists.
- Illinois amended its estate tax for 2026 deaths (graduated rates, non-portable, unindexed) — verify the enacted exclusion.
- Only Connecticut imposes a state gift tax, so lifetime gifting is a state-estate-tax tool elsewhere.
Authorities
- State estate/inheritance tax statutes and 2026 department-of-revenue guidance (vary)
- 35 ILCS 405 (Illinois Estate and GST Tax Act, as amended for 2026)