Most people shouldn't be afraid of federal "death taxes." For 2022, only estates worth $12.06 million or more ($24.12 million or more for a married couple) are slashed by federal estate taxes, and only a small percentage of Americans have accumulated that much wealth. Plus, there's no federal inheritance tax to spook your heirs. (Estate taxes are paid by the estate and based on the estate's overall value, while inheritance taxes are paid by an individual heir on whatever property they inherit.)
But don't feel too comfy if your assets are below the federal estate tax threshold — a tax bill from your state could be lurking in the shadows. While a number of states have reduced or eliminated their death taxes over the past decade or so to dissuade well-off retirees from moving to more tax-friendly jurisdictions, 12 states and the District of Columbia still impose an estate tax and six states have an inheritance tax on the books. (Maryland has both!) So if you don't know about death taxes and live in one of the states listed (alphabetically) below, beware. Your heirs could be haunted by a state tax collector.
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