New York Levies an Estate Tax

 

Only a few states collect their own estate or inheritance tax. Find out if New York collects either (or both) taxes on the estate after someone has died.

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New York state levies an estate tax on estates that exceed a certain threshold. This amount is currently $6.94 million as of 2024. And the gross estate includes gifts made in the three years prior to death. 

New York's estate tax rate starts at 3.06% and increases to 16%. Even though the rate is lower than the federal rate, it is applied to the entire estate if that estate exceeds the exclusion amount by 105%, not just on the portion that exceeds the exemption for that year. A so-called "cliff tax."

This tax applies to estates that own property in New York, so a resident of another state that inherits property located in New York will have to pay this tax if the estate exceeds the limit. Click here for a link to the New York Department of Taxation and Finance's summary of the estate tax requirements.

This state-specific estate tax is in addition to the federal estate tax, which also falls on the estate of the person who died, not on the people who inherit that property. There is an exemption of  $13,610,000, and only people who die with an estate larger than that exemption will have to pay estate tax, which means that it is estimated that only the richest .14% of Americans will be subject to the estate tax, or only 2 out of every 1,000 people who die.

If someone dies in New York with less than the state exemption amount (currently $6.58 million), their estate doesn't owe any state estate tax. The heirs and beneficiaries inherit the property free of tax, and don't pay income tax on it, either, because the inherited property is not ordinary income. The only exception to this is inherited retirement accounts, which are subject to income tax as the assets are withdrawn.

 





Jurisdictional relevance: ST

There are versions of this article for each State.