Don't Want Your Inheritance to Go to the Government? Avoid Living in These States

Depending on the size of your estate at death, you could end up giving more to your state than to the federal government. While the federal estate tax rate stands at 40%, the 13 states with estate taxes range from 10% to 16%. Yet, despite the lower rates, state estate taxes can take a bigger bite due to much lower exemptions.

For 2025, the federal exemption is nearly $14 million. But in most states with estate taxes, exemptions range from just $1 million to around $5 million, depending on the state.

Take a couple living in Minnesota, for instance. Minnesota taxes estates over $3 million, with rates that quickly ramp up to 16%. If you pass away in Minnesota with a $35 million estate, you’ll face a state estate tax bill of roughly $4.9 million. Since the federal exemption is much higher, your federal estate tax would only be around $3.9 million.

Sound absurd? Here’s the list of states you might want to avoid calling home when you die:

• Connecticut

• Hawaii

• Illinois

• Maine

• Maryland

• Massachusetts

• Minnesota

• New York

• Oregon

• Rhode Island

• Vermont

• Washington

• District of Columbia

  
  

And another five states impose inheritance taxes. The good news? That leaves 33 states without estate or inheritance taxes, giving you plenty of options to protect your legacy.

If you are looking for a state that is income tax free and estate tax free, here are your choices:

• Texas

• Tennessee

• South Dakota

• Florida

• Nevada

• Washington

• Wyoming

• Alaska