UNLESS you're reading this from the deck of your superyacht, you probably don't have to worry about federal estate taxes. In 2023, only estates worth $12.92 million or more ($25.84 million or more for a married couple) are hit by federal estate taxes, and only a small percentage of Americans have accumulated that much wealth.
State taxes are another story. Although a number of states have reduced or eliminated their estate and inheritance taxes over the past decade to dissuade well-off retirees from moving to more tax-friendly jurisdictions, 12 states and Washington, D.C., still impose an estate tax, and six states have an inheritance tax on the books. Maryland has both. An estate tax is levied on the estate of the deceased, while an inheritance tax is paid by heirs who are subject to the tax (spouses are usually exempt).
Even if you don't consider yourself particularly wealthy, the value of your home and funds in your retirement savings could exceed the estate tax threshold in some states. With that in mind, if you live in a state that imposes an estate or inheritance tax-and you don't plan to move-you may want to talk to a certified financial planner or tax professional about steps you can take to reduce the size of your estate (see the box on page 44 for estate-planning strategies).
OREGON
Estate tax: Yes
Estate tax exemption level: $1 million
Estate tax rates: 10%-16%
Inheritance tax: No
→ The Beaver State is the worst place in the U.S. to die if you're concerned about estate taxes. Oregon has resisted the trend to raise its estate tax exemption or even adjust it for inflation. In addition to taxing estates valued at as little as $1 million, Oregon imposes a relatively high minimum tax rate of 10% on even the smallest of qualifying estates.
PENNSYLVANIA
This story is from the October 2023 edition of Kiplinger's Personal Finance.
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This story is from the October 2023 edition of Kiplinger's Personal Finance.
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