There are currently 18 states plus the District of Columbia that impose either an estate or inheritance tax or both. Nine of those states are introducing death tax changes in 2017, and they’re all changes that lessen the tax bite. How much you may leave your heirs free of state death tax depends on where you live, where you own property, whom you’re leaving your money to, and whether your estate planning is up to date.
New Jersey raised the estate tax exemption from $675,000 to $2 million in 2017, and repealed the state estate tax, but not the inheritance tax. There will be scheduled increases in the estate tax exemption amounts in Maryland, Minnesota, and New York (to $5.25 million on April 1), and inflation adjustments to the exemption amounts in Delaware, Hawaii, Maine, Rhode Island and Washington.
Florida has no income tax and no state death taxes. However, just because you live in a no-estate-tax state now, you shouldn’t get complacent. What if you move in your old age to the estate-tax-happy Northeast to be closer to your family? Or what about your real property in an estate-tax-happy state? Each state has its own quirks, but there are surefire ways to limit your state estate tax bite with a little bit of planning.
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