In 2017 there are 18 states, plus the District of Columbia that impose an estate or inheritance tax on decedent residents. And although state estate and inheritance taxes may provide significant revenue to states that impose them, certain states such as Delaware have decided that the estate tax revenue fails to compare to the loss of revenue caused by wealthy residents moving to more tax-friendly states. As a result, a number of states are acting to repeal state estate and inheritance tax laws (or weaken them by increasing individual estate tax exemption amounts).
Estate Tax Repeal.
- Delaware will repeal its estate tax after Dec. 31, 2017.
- New Jersey will repeal its estate tax after Dec. 31, 2017, but will retain its inheritance tax.
- Indiana repealed its estate and inheritance tax as of July 1, 2017.
Increased Estate Tax Exemption
- The District of Columbia will increase its estate tax exemption amount for decedents who pass after Dec. 31, 2017, to conform with the federal estate tax exemption ($5.49 million in 2017)
- The Maryland estate tax exemption will increase to $4 million in on Jan. 1, 2018, and will equal the federal exemption amount on Jan. 1, 2019, at which time the Maryland estate tax exemption also will become portable between spouses.
- New York’s estate tax exemption of $5.25 million will increase to equal the federal exemption on Jan. 1, 2019.
- The estate tax exemptions in Hawaii and Maine already match the federal estate tax exemption and other states such as Minnesota, Rhode Island, and Washington State also are gradually increasing their individual estate tax exemption amounts.
For a resident of a state that is ushering in new estate tax laws, it is important that existing estate planning documents be reviewed by an attorney, as updates to tax-planning provisions may be necessary.