Idaho residents planning their estates often wonder about state-level estate taxes and how they might affect their legacy plans. Understanding the state’s approach to estate taxation can help families make informed decisions about their financial future.
Idaho does not currently impose a state estate tax on residents. This means that when someone passes away in Idaho, their estate will only be subject to federal estate tax if it exceeds the federal exemption threshold, which is $13.61 million per person for 2024.
For most Idaho families, this creates a simpler estate planning environment. A family with a $2 million estate, for example, would face no state estate tax obligations in Idaho, allowing more of their wealth to pass directly to their intended beneficiaries.
How Does Idaho Compare to Other States Regarding Estate Tax?
Idaho joins the majority of U.S. states that do not impose their own tax. Currently, only about 12 states plus the District of Columbia maintain state estate taxes. Exemption amounts and tax rates varying significantly.
This puts state residents at an advantage compared to those in other states like Washington. That state imposes a state estate tax on estates exceeding $2.193 million.
What About Inheritance Taxes?
Idaho also does not impose an inheritance tax on beneficiaries who receive assets. The two taxes are distinct. Estate taxes are paid by the estate itself, while inheritance taxes are paid by the people who receive the assets.
This means that if a parent leaves their home worth $500,000 to their adult child, that child would not owe state taxes on the inheritance. Although they may still need to consider federal tax implications depending on the total estate value.
What This Means for Idaho Estate Planning
The absence of state estate and inheritance taxes in Idaho simplifies certain aspects of estate planning. But families still need to consider federal requirements and other important planning elements.
Idaho residents with substantial assets should still work with qualified tax professionals to address federal estate tax planning.
For families with estates under the federal exemption threshold, the focus can shift to other important considerations. Those include establishing trusts and ensuring proper beneficiary designations on retirement accounts and life insurance policies.
(Learn More: Read about revocable trusts in Idaho versus Nevada.)
