What Are Inheritance Taxes?

Inheritance taxes—sometimes confused with estate taxes—are taxes imposed on the transfer of property after someone passes away. These taxes are based on the value of the deceased person’s assets and can affect how much their heirs ultimately receive.

At Walker Tax Relief, I help individuals and families understand how these taxes may apply to them, and how to plan wisely to protect their legacy.

State vs. Federal: What’s the Difference?
Not all states impose inheritance taxes. As of now, only six states do:

Iowa

Kentucky

Maryland

Nebraska

New Jersey

Pennsylvania

The federal government does not have an inheritance tax—but it does have an estate tax. In 2025, the federal estate tax applies to estates exceeding $11.7 million for individuals or $23.4 million for married couples (note: these thresholds are subject to change based on tax law updates).

Who Pays the Tax?
In most cases, the estate (not the individual heirs) is responsible for paying any taxes owed before assets are distributed. This means the total value passed down may be reduced if estate or inheritance taxes apply.

In some states, however, heirs themselves may owe tax on what they inherit—especially if they are not closely related to the deceased.

Rates and Exemptions
Inheritance and estate tax rates vary depending on:

The state you live in

The value of the estate

Your relationship to the deceased

For example, in Maryland, the inheritance tax can range from 10% to 16%. However, spouses and charitable organizations are often exempt. Some assets—like life insurance proceeds—may also be exempt from taxation, depending on how they are structured.

Why Planning Matters
Even if you don’t currently live in a state with inheritance taxes or don’t expect your estate to be taxed federally, laws change. Proactive planning helps ensure that:

Your loved ones receive what you intend

You minimize potential taxes

You have clarity about what applies to your situation

Let’s Talk About Your Legacy
Inheritance and estate taxes can be confusing—but you don’t have to navigate them alone. At Walker Tax Relief, I can help you understand the current laws and work with your attorney or financial planner to develop a strategy that fits your goals.

Reach out today for a consultation.
Let’s protect your legacy and give your loved ones peace of mind.