Does New York Have an Inheritance Tax?

Last updated: June 2024 · Reviewed by Albert Goodwin, Esq., New York estate attorney (admitted to the New York State Bar and the U.S. District Courts for the Southern and Eastern Districts of New York).

The Short Answer: No, New York Does Not Have an Inheritance Tax

New York does not have an inheritance tax. If you are a beneficiary who has received money or property from someone who died, you do not file a New York “inheritance tax” return and you do not owe a transfer tax to the State simply for receiving an inheritance. Only a small number of states — Pennsylvania, New Jersey, Kentucky, Maryland, Iowa (being phased out), and Nebraska — impose a true inheritance tax. New York is not one of them.

What New York does have is an estate tax. This is a critical distinction that is frequently confused, even in published guidance. Because the two taxes work very differently — and because one of them can cost a New York family hundreds of thousands of dollars — it is worth understanding exactly which tax applies and to whom.

Inheritance Tax vs. Estate Tax: The Key Difference

The two taxes are legally distinct and are paid by different parties:

• Inheritance tax is paid by the beneficiary — the person who receives assets — and the rate often depends on how closely related the beneficiary was to the decedent. New York imposes no such tax.
• Estate tax is paid by the estate itself, out of the decedent’s assets, before anything is distributed to beneficiaries. The rate depends on the total taxable value of the estate, not on who inherits. New York imposes this tax under New York Tax Law § 952.

So when people ask “Does New York have an inheritance tax?” the accurate answer is: no inheritance tax, but yes to an estate tax that may apply to larger estates.

Do Beneficiaries Pay Tax on an Inheritance in New York?

Generally, no. Receiving an inheritance is not, by itself, a taxable event for the beneficiary in New York. There are a few important nuances:

• The inheritance itself is not income. Inherited cash, real estate, and most property are not treated as taxable income on your New York or federal income tax return.
• Income generated by inherited assets is taxable. If you inherit a brokerage account that pays dividends, or a rental property that produces rent, the future income those assets generate is taxable to you once you own them.
• Inherited retirement accounts are different. Distributions from an inherited traditional IRA or 401(k) are generally taxable as ordinary income when you withdraw them, because that money was never previously taxed.
• Capital gains and stepped-up basis. When you inherit appreciated property, you generally receive a “stepped-up” cost basis equal to the fair market value at the date of death. If you later sell, you usually only owe capital gains tax on appreciation that occurs after the date of death.

Who Pays the New York Estate Tax?

The New York estate tax is owed by the estate of a decedent who was either:

• a New York resident at the time of death (taxed on worldwide assets), or
• a non-resident who owned real property or tangible personal property physically located in New York (taxed on the New York-situs assets only).

This is why residency and situs rules matter. A Florida resident who owns a Manhattan condominium can have a New York estate tax filing obligation on the value of that New York property, even though Florida itself has no estate tax. Conversely, a true change of domicile away from New York &mdash where the person genuinely relocates their primary home, voting, driver’s license, and life — can remove worldwide intangible assets from New York’s reach.

Current New York Estate Tax Exemption (2024)

For deaths occurring in 2024, the New York basic exclusion amount is approximately $6.94 million per person, indexed annually for inflation under § 952. If the taxable estate is below the exclusion amount, generally no New York estate tax is due (a filing may still be required).

By contrast, the federal estate tax exemption for 2024 is approximately $13.61 million per person. Federal estate tax rates reach 40% on amounts above the federal exemption. New York estate tax rates are graduated and top out at 16%.

Exemption amounts change every year and the federal exemption is scheduled to drop by roughly half after 2025 unless Congress acts. We update this page annually, but always confirm the current figures for the year of death before relying on them.

The New York Estate Tax “Cliff” — The Most Important Trap

Unlike the federal system, which only taxes the amount above the exemption, New York has a notorious estate tax “cliff.” Under § 952, the benefit of the exclusion phases out rapidly once an estate exceeds the exemption, and it disappears entirely once the estate exceeds 105% of the exemption. Above that point, the entire estate is taxed — not just the excess.

Worked Example of the New York Cliff (Using a $6.94M Exemption)

• Estate of $6.94 million (at the exemption): No New York estate tax is due.
• Estate of $7.0 million (just over the exemption): Only a small portion of the exclusion is lost, so the tax is modest — the partial credit cushions the impact.
• Estate of $7.287 million (exactly 105% of the exemption): The exclusion is fully phased out. Now the estate tax is calculated on the whole $7.287 million as if there were no exemption at all — resulting in roughly $620,000+ of New York estate tax.

In other words, an estate worth about $347,000 over the exemption can trigger tax on the entire estate. This means a relatively small amount of additional value — even one more piece of real estate or a life insurance policy owned outright — can push a family off the cliff and create a tax bill that exceeds the amount by which they went over. Careful planning to stay below 105% of the exclusion is often the single highest-value step a New Yorker can take.

The 3-Year Gift Add-Back

New Yorkers sometimes assume they can simply give assets away before death to shrink their taxable estate. New York limits this. Under New York Tax Law, certain taxable gifts made within three years of death are “added back” into the New York gross estate for purposes of calculating the estate tax. This rule is designed to prevent deathbed transfers that would otherwise avoid the estate tax.

Importantly, gifts that fall within the federal annual exclusion (the per-recipient amount you can give each year without filing a gift tax return) are generally not caught by this rule, and the add-back has specific timing and effective-date limitations. Because the details are technical and have changed over time, lifetime gifting as a New York estate-tax strategy should be coordinated with an attorney and confirmed against the current statute.

New York Has No Portability — And Why That Matters

At the federal level, a surviving spouse can use the deceased spouse’s unused exemption through an election called “portability.” That election is made on the federal estate tax return, IRS Form 706 (not Form 4768, which is merely the application for an extension of time to file or pay). Portability can effectively allow a married couple to shelter close to twice the federal exemption.

New York does not offer portability. If the first spouse to die leaves everything outright to the survivor and uses the unlimited marital deduction, that first spouse’s roughly $6.94 million New York exemption is simply lost. When the second spouse later dies, only one exemption is available — potentially wasting millions of dollars of shelter.

Planning Strategies to Address the Lack of Portability

Because New York will not give a married couple a second exemption automatically, couples typically recapture it through trust planning rather than by leaving everything outright. Common approaches include:

• Credit shelter (bypass) trust: On the first death, an amount up to the New York exemption is funded into a trust for the surviving spouse’s benefit instead of passing outright. Those assets are sheltered by the first spouse’s exemption and are not included in the survivor’s taxable estate, preserving both exemptions.
• QTIP-election trust: New York permits a separate state QTIP election, allowing flexibility to defer tax to the second death while still controlling where assets ultimately go — useful for blended families and for fine-tuning around the cliff.
• Disclaimer-based planning: A surviving spouse can disclaim assets into a credit shelter trust, providing post-death flexibility to decide how much exemption to use based on the law and the family’s circumstances at that time.

Charitable bequests and the marital deduction can also reduce a taxable estate, and in cliff situations, a modest charitable gift can sometimes save far more in tax than the gift itself costs.

For a deeper look at advanced approaches, see our overview of advanced New York estate planning techniques and our discussion of the advantages and disadvantages of creating a testamentary trust.

Related Questions

Are joint bank accounts taxed when someone dies in New York?

Joint accounts raise their own questions for estate-tax inclusion and for beneficiaries. We cover this separately in are joint bank accounts subject to inheritance tax?

Is inherited money taxable income in New York?

No. The estate tax is a transfer tax, not an income tax. Inherited money is not reported as income. However, income later earned on inherited assets, and distributions from inherited pre-tax retirement accounts, can be taxable. See the section above on beneficiaries.

Will moving to Florida avoid the New York estate tax?

A genuine change of domicile can remove worldwide intangible assets from New York’s estate tax. But New York scrutinizes domicile claims, and real property physically located in New York remains subject to New York estate tax regardless of where the owner lived. Moving is a planning option, not a loophole, and it must be done thoroughly.

Speak With a New York Estate Tax Attorney

The difference between an inheritance tax and an estate tax — and the unforgiving New York cliff and lack of portability — means that families with estates approaching or exceeding the New York exemption should plan well before death. To discuss your situation, you can contact New York estate attorney Albert Goodwin at the Law Offices of Albert Goodwin at (212) 233-1233.

This article is for general informational purposes and is not legal or tax advice. Exemption amounts, rates, and statutory rules change; confirm the current figures and consult a qualified attorney about your specific circumstances.