Virginia residents can breathe easy when it comes to estate taxes. The Commonwealth eliminated its state estate tax years ago, joining the majority of states that don't impose additional death taxes (like inheritance tax) on their residents.
Does Virginia Have an Estate Tax?
Virginia does not impose a state estate tax. The state also has no inheritance tax. This means Virginia families only need to worry about federal estate tax, which affects very few estates due to its high exemption threshold.
Virginia previously had a state estate tax tied to the federal credit system. Before 2001, the federal government allowed a dollar-for-dollar credit for state estate taxes paid. This meant states could impose estate taxes up to the credit amount without increasing the total tax burden on families.
When Congress phased out this federal credit between 2001 and 2005, Virginia faced a choice. The state could maintain its estate tax as a separate burden on families, or eliminate it entirely. Virginia chose to let its estate tax expire, following the lead of many other states that made the same decision.
What Does No Estate Tax Mean for Virginia Families?
Without state death taxes, Virginia estates only face federal estate tax. The federal exemption for 2024 stands at $13.61 million per person, rising to $15,000,000 for 2026. This means a married couple can pass up to $30 million to their heirs without any federal estate tax.
Consider the Johnson family from Richmond. When patriarch Robert Johnson passed away in 2023, his estate included a $800,000 home, $300,000 in retirement accounts, and $200,000 in other assets. His total estate of $1.3 million faced no Virginia estate tax and fell well below the federal threshold.
How Does Virginia Compare to Other States?
Virginia's approach puts it in good company. Only 12 states and the District of Columbia currently impose estate taxes, and just six states have inheritance taxes. Most of these states have much lower exemption thresholds than the federal level.
For example, while Virginia imposes no state death tax, neighboring Maryland has an estate tax with a $5 million exemption. A Maryland resident with a $7 million estate would owe state estate tax on $2 million, while the same estate in Virginia would face no state tax burden.
What About Future Changes?
Estate tax laws can change, but Virginia has shown no recent interest in reinstating death taxes. The state's focus remains on attracting residents and businesses rather than imposing additional tax burdens on wealth transfer.
The federal estate tax exemption is scheduled to drop significantly in 2026 unless Congress acts. Even with potential federal changes, Virginia's lack of state death taxes provides certainty for estate planning purposes. Families creating revocable trusts or other estate planning documents can focus on avoiding probate and managing assets efficiently without worrying about state-level estate taxes.
(Read More: Learn about revocable trusts in Virginia versus Nevada and the cost of probate in Virginia.)
Sources
- Virginia Statutes (§ 64.2-200, § 64.2-2201, § 64.2-2201, § 64.2-601, § 64.2-403)