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The Worst Places to Die: Comparing the States on Death Taxes

Posted by Brian Garst on February 26, 2011

SmartMoney compares how the states rank on death taxes.

With the new $5 million federal estate tax exemption for 2011 and 2012, most folks are blissfully free of any federal estate tax worries (for now). That’s the good news. The bad news: Twenty states and the District of Columbia impose estate or inheritance taxes that kick in below the $5 million mark, and some kick in below $1 million. If you live in one of these places, your estate can be exempt from the federal death tax but still exposed to state death taxes.

16 States and DC Have Estate Taxes

The sixteen states and the District of Columbia, which impose their own estate taxes (as opposed to inheritance taxes, which I will explain later) base their taxes on the entire value of an estate in excess of the applicable exemption.

The exemptions vary from a low of $338,333 to a high of $5 million. Specifically:

• Three states have exemptions of less than $1 million (Ohio at $338,333; New Jersey at $675,000; and Rhode Island at $850,000).

• Six states have $1 million exemptions (Maine, Maryland, Massachusetts, Minnesota, New York, and Oregon), and so does D.C.

• Three states have $2 million exemptions (Illinois, Vermont, and Washington)

• Two states have $3.5 million exemptions (Connecticut and Delaware).

• Two states have $5 million exemptions (Hawaii and North Carolina).

The lowest tax rates are 7% (Ohio) and 12% (Connecticut). The highest is 19% (Washington). The other 13 states and D.C. all charge 16%.

…The worst place to die is New Jersey with a combined effective estate and inheritance tax rate of 54.1%. Congrats to the Garden State! In second place is Maryland at 50.9%. Good try! In fact, none of the states mentioned here are good places to die, but some are significantly worse than others. Most of the states listed here are not good places to live either from a tax perspective because they sock it to you with income, property, and sales taxes while you’re still kicking.

Read the whole comparison here.

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