Inheritance Tax in New York: Why It Doesn’t Exist
Understand why New York imposes no inheritance tax and what it means for estate planning within the state.
Here’s the simple answer: there is no inheritance tax in New York. Beneficiaries aren’t taxed by the state just for receiving an inheritance. What New York has instead is a state estate tax—a tax on the decedent’s estate before assets pass to heirs—separate from (and with a much lower threshold than) the federal system.
Historically, states used different “death taxes”: some taxed heirs (inheritance tax), some taxed estates, some did both. New York moved decisively toward the estate-tax-only model, aligning its rules with the old federal “pick-up” credit in the late 1990s and, after federal changes in the 2000s, keeping a stand-alone estate tax rather than reviving an inheritance tax. In short, the state chose to tax estates, not beneficiaries—and it still does.
What New York’s Estate Tax Means for Families
While there’s no inheritance tax in New York, larger estates can still owe New York estate tax. The state sets an annually inflation-indexed basic exclusion amount (for 2025, $7.16 million per person).
If the taxable estate stays under that figure, there’s no New York estate tax; if it goes over—especially just over—the estate can face significant tax due to New York’s unique “cliff” rule that phases out the benefit of the exclusion once you exceed it. Rates are graduated and top out at 16%. Planning near the threshold matters.
Practical Takeaways for Heirs and Executors
Heirs generally don’t pay taxes on what they receive. But the estate might owe New York estate tax first, reducing what ultimately passes to them.
Income, however, can still be taxable. Inheritances aren’t income, but items like traditional IRA/401(k) distributions are taxable when an heir withdraws them. (It’s “income in respect of a decedent”). Charitable bequests, credit-shelter/QTIP trusts for spouses (New York has no portability), and careful lifetime-gift timing can help manage exposure to the New York estate tax and its cliff.
If you’re googling “inheritance tax in New York,” rest easy—the state doesn’t impose one. Focus instead on whether a loved one’s estate might trigger New York’s estate tax and on smart planning to keep more in the family.
(Further Reading: Revocable trusts in New York versus Nevada.)