The New York estate tax exemption is $7,350,000N.Y. Tax Law §§ 951–971Verified Sep 15, 2026View source; an estate below it owes no state estate tax. The exemption is indexed to inflation and adjusts each yearN.Y. Tax Law §§ 951–971Verified Sep 15, 2026View source. A taxable estate faces graduated rates up to 16%N.Y. Tax Law §§ 951–971Verified Sep 15, 2026View source.

No. The IRS does not treat inherited money, real estate or personal items as income, so a beneficiary in New York does not report them on a federal return when received. Two exceptions: an inherited retirement account (a 401(k) or a traditional IRA) is taxed as ordinary income as it is withdrawn, and earnings after the date of death are taxable. Inherited property takes a stepped-up basis, its value on the date of death, for any later capital gain.

When someone dies, the cost basis of the property they leave is reset to its fair market value on the date of death26 USC § 1014Verified Sep 15, 2026View source under IRC § 1014. A later sale is taxed on the gain above that stepped-up basis, not above what the original owner paid, so the appreciation of the owner's lifetime is never taxed. The rule is federal and applies in New York as in every state.

New York intestacy law decides. New York follows separate property rulesEPTL § 4-1.1Verified Sep 10, 2026View source: the surviving spouse's share depends on whether children survive and whose children they are. The estate passes to the closest surviving relatives, in most cases the spouse and children first, then in order: Parents; Issue of your parents; Grandparents and their issue; Great-grandchildren of your grandparents; New York State (abandoned property)EPTL § 4-1.1Verified Sep 10, 2026View source.