Inheritance Tax Calculator (2026): What Heirs Owe in the 5 States That Still Tax Inheritances
Prefer a walkthrough of how a beneficiary designation keeps money out of probate and out of a state tax bill? Watch this:
Estimate the inheritance tax one beneficiary owes in Pennsylvania, New Jersey, Maryland, Kentucky or Nebraska, 2026 rules.
| How the tax is built | Rate | Tax |
|---|---|---|
| $200,000 | 12% | $24,000 |
| Same bequest in all five states | Inheritance tax |
|---|---|
| Pennsylvania | $24,000 |
| New Jersey | $19,250 |
| Maryland | $0 |
| Kentucky | $0 |
| Nebraska | $1,000 |
Estimates only. Inheritance tax is calculated per beneficiary on the net amount received after debts and expenses, and state rules, exemptions and deadlines change. Confirm your figure with the state revenue department or a qualified tax professional before you file or plan.
Why inheritance tax is a relationship tax, not a size tax
There is no federal inheritance tax in 2026. What exists instead is a state levy that only five states still charge, and it works backwards from what most people expect: the size of the estate matters far less than two other facts - who inherits and where the person who died lived. A niece inheriting $200,000 from a Pennsylvania aunt owes $30,000. The identical niece, inheriting the identical $200,000 from a Maryland aunt, owes $19,900. From a Kentucky aunt, she owes nothing at all, because Kentucky moved nieces and nephews into its fully exempt Class A effective January 1, 2026.
Inheritance tax is charged to the person who receives the money, not to the estate. That is the opposite of the federal estate tax and of the twelve state estate taxes, which are settled by the executor out of the estate before anything is distributed. Maryland is the only state that imposes both, which is why a large Maryland estate can be taxed twice on the same dollars - once by the estate tax on the amount over $5 million, and again by the 10% inheritance tax on what a niece, nephew, cousin or friend receives.
The calculator above runs the 2026 rules for all five states that still levy an inheritance tax, using the statutory rate tables: Pennsylvania, New Jersey, Maryland, Kentucky and Nebraska. Change the state, the relationship or the amount and every card, the bracket breakdown and the five-state comparison update. The life insurance checkbox is the one that matters most to families: in every one of these states, a death benefit paid to a named person is outside the inheritance tax base.
Key takeaways for 2026:
- Five states tax inheritances: Pennsylvania, New Jersey, Maryland, Kentucky and Nebraska. Iowa repealed its tax for deaths on or after January 1, 2025.
- Spouses pay 0% in all five states, and charities are exempt in all five.
- Pennsylvania is the only state that taxes adult children (4.5%) and it has no exemption floor - the tax starts at the first dollar.
- Kentucky now exempts siblings, nieces and nephews under Class A; only Class C heirs (cousins, friends, unmarried partners) still pay there.
- Nebraska is the only state that collects inheritance tax at the county level, at 1%, 11% or 15% depending on the class.
- Life insurance proceeds payable to a named beneficiary escape inheritance tax in all five states; leaving the money outright does not.
Who owes inheritance tax in 2026
The tax follows the deceased person's state of residence for most property. A Florida niece inheriting from a Pennsylvania aunt pays Pennsylvania inheritance tax; a Pennsylvania niece inheriting from a Florida aunt pays none, because Florida has no inheritance tax. For real estate the rule flips: land is taxed where the land sits, so a Kentucky resident's out-of-state house is not subject to Kentucky inheritance tax at all, while a nonresident who owns Kentucky real estate is.
Each state sorts beneficiaries into classes, and the class sets the rate:
- Pennsylvania: 0% for a surviving spouse and for a parent inheriting from a child 21 or younger; 4.5% for direct descendants and lineal heirs; 12% for siblings; 15% for everyone else. No exemption floor.
- New Jersey: Class A (spouse, children and other lineal descendants, parents, stepchildren) pays nothing. Class C (siblings, sons- and daughters-in-law) pays 11% to 16% after $25,000. Class D (nieces, nephews, cousins, friends) pays 15% to 16% with no exemption.
- Maryland: spouses, children and stepchildren and their descendants, parents and grandparents, siblings, a child's spouse and charities are exempt. Everyone else pays a flat 10% after a $1,000 exclusion, and Maryland levies its own estate tax above a $5 million exemption on top.
- Kentucky: Class A (spouse, parents, children, grandchildren, siblings, and since January 1, 2026 nieces and nephews including half blood) pays nothing. Class B (aunts, uncles, sons- and daughters-in-law, certain great-grandchildren) pays 4% to 16% after $1,000. Class C (everyone else) pays 6% to 16% after $500.
- Nebraska: 1% above $100,000 for immediate relatives; 11% above $40,000 for aunts, uncles, nieces and nephews; 15% above $25,000 for everyone else. Surviving spouses, charities and beneficiaries under 22 are exempt.
Inheritance tax on a $200,000 bequest, by state and beneficiary
The same $200,000 produces wildly different bills. This table is generated from the same rate engine the calculator above uses, so the numbers match what you see when you move the slider to $200,000.
| State | Child | Sibling | Niece or nephew | Friend or partner |
|---|---|---|---|---|
| Pennsylvania | $9,000 (4.5%) | $24,000 (12%) | $30,000 (15%) | $30,000 (15%) |
| New Jersey | $0 | $19,250 (9.6%) | $30,000 (15%) | $30,000 (15%) |
| Maryland | $0 | $0 | $19,900 (10%) | $19,900 (10%) |
| Kentucky | $0 | $0 | $0 | $28,620 (14.3%) |
| Nebraska | $1,000 (1%) | $1,000 (1%) | $17,600 (11%) | $26,250 (15%) |
Only Pennsylvania and Nebraska tax a child at all, and Nebraska's 1% rate does not start until the $100,000 exemption is used up. Nebraska is also the odd one out on the sibling row: it treats siblings as immediate relatives (Class 1), while New Jersey taxes them as Class C, and Pennsylvania and Maryland differ by ten percentage points.
A $500,000 bequest to a niece: all five states
Nieces and nephews are the relationship that changed most in 2026, and they show why relationship planning matters more than estate size:
| State | How a niece is treated | Tax on $500,000 | Effective rate |
|---|---|---|---|
| Pennsylvania | Lineal-rate 15% for a niece, no exemption | $75,000 | 15.0% |
| New Jersey | Class D: 15% on the first $700,000 | $75,000 | 15.0% |
| Maryland | Flat 10% after a $1,000 exclusion | $49,900 | 10.0% |
| Kentucky | Class A since January 1, 2026 | $0 | Exempt |
| Nebraska | Class 2: 11% above $40,000 | $50,600 | 11.0% |
Kentucky is now the most generous of the five to nieces and nephews, following the 2026 change to the state's beneficiary classes. Pennsylvania is the harshest, because 15% applies from the first dollar and there is no threshold to absorb any of the transfer.
States that use graduated brackets: Kentucky and New Jersey
Maryland, Pennsylvania and Nebraska apply a single rate to the taxable amount. Kentucky and New Jersey use marginal brackets, where each layer of the inheritance is taxed at its own rate. That means the effective rate is always lower than the top rate.
| Kentucky Class B (aunts, uncles, sons- and daughters-in-law) after a $1,000 exemption | Rate |
|---|---|
| First $10,000 of the taxable amount | 4% |
| $10,000 to $20,000 | 5% |
| $20,000 to $30,000 | 6% |
| $30,000 to $45,000 | 8% |
| $45,000 to $60,000 | 10% |
| $60,000 to $100,000 | 12% |
| $100,000 to $200,000 | 14% |
| Over $200,000 | 16% |
A Kentucky Class B beneficiary inheriting $51,000 subtracts the $1,000 exemption, leaving $50,000 taxable, and pays 4% on the first $10,000, 5% on the next $10,000, 6% on the next $10,000, 8% on the next $15,000 and 10% on the last $5,000: $3,200 in total, not 10% of $50,000.
Kentucky's Class C schedule is steeper and reaches the top rate sooner: 6% on the first $10,000, 8% on the next $10,000, 10% on the next $10,000, 12% on the next $15,000, 14% on the next $15,000 and 16% on everything above $60,000, all after a $500 exemption.
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| New Jersey Class C (siblings, sons- and daughters-in-law) | Rate |
|---|---|
| First $25,000 | 0% |
| $25,000 to $1,100,000 | 11% |
| $1,100,000 to $1,400,000 | 13% |
| $1,400,000 to $1,700,000 | 14% |
| Over $1,700,000 | 16% |
New Jersey Class D, which covers nieces, nephews, cousins and friends, has no exemption at all: 15% on the first $700,000 and 16% above it. New Jersey abolished its estate tax for deaths on or after January 1, 2018, so the inheritance tax is the only one that applies there.
Life insurance and inheritance tax: the exemption that changes the math
This is where a life insurance policy earns its place in an estate plan. A death benefit paid to a named person is not part of the taxable inheritance in any of the five states. The money arrives outside probate, outside the estate's creditors, and outside the inheritance tax base. Pennsylvania goes further than the other four: a state regulation exempts proceeds from a life insurance contract even when the policy is payable to the decedent's estate.
| State | Life insurance to a named beneficiary | Life insurance payable to the estate |
|---|---|---|
| Pennsylvania | No inheritance tax | No inheritance tax (statutory exemption applies either way) |
| New Jersey | No inheritance tax | Proceeds join the taxable transfer |
| Maryland | No inheritance tax | Proceeds join the taxable transfer |
| Kentucky | No inheritance tax | Proceeds join the taxable transfer |
| Nebraska | No inheritance tax | Proceeds join the taxable transfer |
The practical consequence is simple arithmetic. A Pennsylvania resident who wants to leave $200,000 to a nephew has two options. Leave $200,000 of brokerage assets and the nephew owes $30,000 of inheritance tax, keeping $170,000. Buy a $200,000 term or permanent policy naming the nephew directly and the same $200,000 arrives intact - and the premium for a healthy 50-year-old man on a 20-year term is a fraction of that tax bill. For heirs who are cousins, friends or unmarried partners, the gap is the same 15% in Pennsylvania and Nebraska and 15% to 16% in New Jersey and Kentucky.
Two cautions belong next to that arithmetic. First, naming individuals, not "the estate," is what preserves the exemption in New Jersey, Maryland, Kentucky and Nebraska. Second, if the insured owns the policy, the death benefit is still inside the federal taxable estate at death, and for a married couple the 2026 federal exemption is $15 million per person with portability. An irrevocable life insurance trust removes the proceeds from the federal estate as well, which is the subject of our ILIT guide and our estate tax life insurance calculator.
How to reduce or avoid inheritance tax
- Name people as beneficiaries, not the estate. An "estate of" designation pulls the asset into the taxable transfer in every state except Pennsylvania and turns a tax-free death benefit into a taxable inheritance.
- Use life insurance for the bequest. A policy payable to the heir delivers the full amount and skips the inheritance tax base entirely, which is the cheapest way to move money to a niece, nephew, cousin or unmarried partner.
- Leave the money to a surviving spouse first. Spouses pay 0% in all five states, and Missouri-style marital planning can defer the tax until the second death.
- Give during life. None of the five states levies a gift tax, so lifetime transfers can shrink the taxable inheritance. Pennsylvania applies a one-year lookback to gifts made shortly before death and Kentucky can reach gifts made within three years, so give early rather than late.
- Use an irrevocable life insurance trust. An ILIT keeps the death benefit out of the federal estate and gives the trustee control over when heirs receive the money.
- Consider a charitable bequest. Charities are exempt from inheritance tax in all five states, so a charitable gift to a cousin's benefit through a charity is not the same as an outright gift to the cousin - but a charitable remainder trust can pay an income stream to a non-exempt heir while the remainder goes to charity tax-free.
Frequently asked questions
Is there a federal inheritance tax in 2026?
No. The federal government taxes estates above $15 million per person in 2026, not inheritances. An inheritance tax is charged to the person receiving the money and exists only at the state level, in Pennsylvania, New Jersey, Maryland, Kentucky and Nebraska. Death benefits from life insurance are generally excluded from federal income tax, and the federal estate only reaches an estate above the exemption.
Which states have an inheritance tax in 2026?
Pennsylvania, New Jersey, Maryland, Kentucky and Nebraska. Iowa repealed its inheritance tax for deaths on or after January 1, 2025. Twelve states and the District of Columbia impose a separate estate tax, and Maryland is the only state that imposes both.
Do I owe inheritance tax if I live in another state?
Yes, in many cases. The tax follows the deceased person's state of residence for intangible property such as bank accounts, brokerage accounts and retirement plans, so a Florida heir inheriting from a Pennsylvania resident can still owe Pennsylvania inheritance tax. Real estate is taxed where the property is located instead.
Who pays inheritance tax, the estate or the heir?
The heir. Inheritance tax is assessed on each beneficiary's share, based on their relationship to the person who died, and is reported on that state's inheritance tax return - Form REV-1500 in Pennsylvania, Form 92A200 in Kentucky, and the equivalent filing with the Register of Wills in Maryland or the county court in Nebraska. Pennsylvania allows a 5% discount when the tax is paid within three months of death, and Kentucky allows 5% when it is paid within nine months.
Is life insurance subject to inheritance tax?
A death benefit payable to a named beneficiary is not subject to inheritance tax in any of the five states that levy one. Proceeds payable to the estate do become part of the taxable transfer in New Jersey, Maryland, Kentucky and Nebraska. Pennsylvania exempts life insurance proceeds even when they are payable to the estate, under the state regulation on life insurance contracts.
Are nieces and nephews exempt from inheritance tax?
It depends entirely on the state. Kentucky moved nieces and nephews (including half blood) into its fully exempt Class A for deaths on or after January 1, 2026. Maryland, New Jersey, Nebraska and Pennsylvania all tax them: $19,900 on a $200,000 bequest in Maryland, $30,000 in New Jersey and Pennsylvania, and $17,600 in Nebraska. That last figure is the clearest argument for delivering a bequest to a niece through life insurance instead of an outright gift.
Does the death benefit count toward an estate tax too?
If you own the policy, yes. The death benefit is included in your federal taxable estate even though it escapes the inheritance tax, which only matters above the $15 million federal exemption in 2026. An irrevocable life insurance trust solves that by taking the policy, and the proceeds, out of your estate. Our probate cost calculator and Medicaid estate recovery calculator cover the two other costs that land on an estate after death.
Related resources
- Pennsylvania Department of Revenue - Inheritance Tax (official rates: 0%, 4.5%, 12%, 15%)
- New Jersey Division of Taxation - Inheritance Tax Rates (Class A, C and D schedules)
- Kentucky Revised Statutes 140.070 - Inheritance tax rates (as amended effective April 27, 2026)
- Nebraska Revised Statutes 77-2004 and 77-2005 (1%, 11% and 15% rate classes)
- IRS - Life Insurance and Disability Insurance Proceeds (federal income tax treatment)
- NAIC consumer resources and AM Best insurer ratings (check the carrier's financial strength before you buy)
- Life insurance beneficiary calculator - split a death benefit between heirs correctly
- Life insurance estate planning guide - where a policy fits in an estate plan
- Medicaid estate recovery calculator - the states that can claw back an inheritance
Get a quote sized to the tax bill
If the calculator shows an inheritance tax bill, the cheapest way to hand your heirs the full amount is usually a term or permanent policy with them named directly. Compare quotes from up to 50 carriers and see what a policy sized to that tax bill costs per month.
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How this calculator models the 2026 inheritance tax rules
The calculator applies each state's statutory schedule to a single beneficiary's share. Pennsylvania uses its four flat rates with no exemption. Maryland applies a flat 10% after a $1,000 exclusion to non-exempt beneficiaries. New Jersey runs its Class C and Class D marginal brackets. Kentucky runs its Class B and Class C marginal brackets after the statutory $1,000 and $500 exemptions, with Class A exempt as amended in 2026. Nebraska applies 1% above $100,000, 11% above $40,000 and 15% above $25,000 by class, with beneficiaries under 22 exempt. Where a bequest is life insurance payable to a named beneficiary, the tax is shown as $0 in all five states.
One limit worth stating plainly: this tool estimates tax on one beneficiary's inheritance. It does not compute a federal estate tax, a state estate tax, income tax on retirement accounts inherited by a non-spouse, or the effect of debts, funeral expenses and administration costs that reduce the taxable transfer. Our probate cost calculator, Medicaid estate recovery calculator and ILIT guide cover those neighbouring questions.
