What are “death taxes”? In which states do your loved ones pay the most taxes when you die?
Estate taxes, which some Republicans refer to as ‘death taxes’ affect only the wealthiest families in the US. Which states apply their own estate tax?
Estate taxes sometimes referred to as the “death tax” by Republicans, are levied against the assets and wealth of those who have passed away. In recent years these taxes have been reduced significantly. These legal changes have allowed enormous wealth transfers between familial generations to occur that further perpetuate evergrowing economic inequalities.
The estate tax applied to the assets of the deceased is based on the value of the estate. In the case of properties, art, jewelry, or other physical assets, the value is based on the “fair market value [...] not necessarily what you paid for them or what their values were when you acquired them.” The total is what is known as the “Gross Estate.”
How is the estate tax calculated?
Once the value of the Gross Estate has been calculated, those who are required to submit a tax return can see if they are able to make any deductions. However, estates that are “relatively simple,” such as those that are made up of “cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property [...] do not require the filing of an estate tax return.”
In 2022, estates with a value of $12,060,000 must file a return, a significantly increased upper bound compared to the $1,500,000 seen in 2004 and 2005. This means that if an estate is valued at less than $12,060,000, no return needs to be filed with the IRS. This sum is quite absurd and has come under extreme criticism by people who see this as a giveaway to the rich because low and middle-class families will never reach such levels. Their own economic troubles are often a result of wealth consolidation in the upper tax brackets.
Which states tax estates at the highest levels?
There are seventeen states plus Washington DC that have an estate or inheritance tax that is tacked on in addition to the federal government. Many of the states with the largest economies, like California and Texas, do have an estate or inheritance tax.
| State | Tax Rate (%) | Estate Size |
|---|---|---|
| Connecticut | 11.6 - 12 | above $9.1 million |
| District of Columbia | 11.2 - 16 | above $4.3 million |
| Hawaii | 10 - 20 | above $5.5 million |
| Illinois | 0.8 to 16 | above $4 million |
| Iowa | up to 9 | N/A |
| Kentucky | up to 16 | N/A |
| Maine | 8 - 12 | above $5.8 million |
| Maryland | 0.8 - 16 | above $5 million |
| Massachusetts | 0.8 - 16 | above $1 million |
| Minnesota | 13 - 16 | above $3 million |
| New York | 3.06 - 16 | above $6.1 |
| Oregon | 10 - 16 | above $1 |
| Rhode Island | 0.8 - 16 | above $5 million |
| Washington | 10 - 20 | above $2.2 million |