New York Estate Tax in 2026: Exemption, Rates and How It Is Calculated

New York taxes estates above $7,350,000 in 2026 at rates that reach 16%, and it does so with a cliff that can tax the entire estate from the first dollar. Here is who pays, how the tax is computed, and what we do about it.

The federal estate tax now concerns very few families. The federal exclusion is $15,000,000 per person in 2026, $30,000,000 for a married couple, and it is permanent, with no scheduled sunset. New York is a different story. The New York basic exclusion amount for deaths in 2026 is $7,350,000, there is no portability between spouses, and the exclusion disappears entirely once the taxable estate exceeds 105% of that figure. A Manhattan apartment or a house in Nassau, a retirement account and a life insurance policy can put an ordinary family over the line.

This page explains how the New York estate tax works in 2026: who is subject to it, how the gross estate and the taxable estate are built, the rate table, the cliff, the three-year gift add-back, the filing rules for Form ET-706, and the planning tools we use to reduce or eliminate the tax. All figures below are the 2026 numbers.

Who pays the New York estate tax

New York imposes an estate tax, not an inheritance tax. The tax is paid by the estate before anything is distributed; the people who inherit owe nothing on what they receive. We explain the distinction at does New York have an inheritance tax. Two groups of decedents are subject to the estate tax:

• New York residents. If you are domiciled in New York when you die, the tax reaches essentially everything you own: New York real estate, bank and brokerage accounts, retirement accounts, business interests, life insurance you controlled, and tangible property. Real estate and tangible property physically located in another state are generally left out.
• Nonresidents with New York real or tangible property. A Florida or New Jersey resident who dies owning a New York apartment, house or artwork is taxed on that property only. Intangible assets, including stocks, bonds, cash accounts and, under current guidance, LLC or partnership interests that hold New York real estate, are generally not taxed for nonresidents. Putting a New York property into an LLC converts it into an intangible, which is why we recommend that step for clients who move away but keep a New York home.

The 2026 basic exclusion amount: $7,350,000

The New York basic exclusion amount for deaths in 2026 is $7,350,000, up from $7,160,000 in 2025. It is adjusted for inflation each year. The federal exclusion is $15,000,000 per person, roughly double the New York figure, which is why most of the estate tax planning we do for New Yorkers is aimed at the state tax rather than the federal one.

The word “exclusion” is misleading. New York does not exclude the first $7,350,000 and tax the rest. Instead, the tax is computed on the whole taxable estate and then offset by a credit that equals the tax on $7,350,000. The credit is phased out between 100% and 105% of the exclusion amount and is gone entirely at $7,717,500. That phase-out is the cliff, and we come back to it below.

New York estate tax rates for 2026

Tax Law § 952(b) applies graduated rates that begin at 3.06% on the first $500,000 and end at 16% on the amount over $10,100,000. The full table is below. The lower brackets matter more than they look, because once an estate is over the cliff the table is applied to the entire estate from the first dollar:

In 2026, an estate under $7,350,000 pays nothing; the exclusion covers it. An $8,000,000 taxable estate, for example, falls in the $7,100,000 to $8,100,000 bracket: $650,800 plus 13.6% of the $900,000 above $7,100,000, for a total of $773,200.

How the New York gross estate is computed

New York starts from the federal gross estate, whether or not a federal return is due, and then makes its own adjustments. In practice the gross estate includes far more than the assets that pass under a will:

• Probate assets. Everything titled in your sole name that passes under your will or by intestacy: real estate, bank and brokerage accounts, business interests, vehicles, art and jewelry.
• Non-probate assets. Assets in a revocable living trust, transfer-on-death and payable-on-death accounts, and accounts with named beneficiaries. They avoid probate, but they do not avoid the estate tax. Avoiding probate and avoiding tax are two different projects.
• Life insurance. The full death benefit of any policy you owned or over which you held “incidents of ownership” (IRC § 2042), such as the right to change the beneficiary or borrow against the policy. A policy given away within three years of death is pulled back in (IRC § 2035). The fix is an irrevocable life insurance trust, set up early.
• Jointly held property. Property held jointly with a spouse is included at half its value. Property held jointly with anyone else is included in full unless the survivor can prove that he or she contributed to its purchase.
• Retirement accounts. IRAs, 401(k)s and similar accounts are included at their full date-of-death value, even though the beneficiary will owe income tax on withdrawals.
• The three-year gift add-back. Taxable gifts made by a New York resident within three years of death are added back to the New York gross estate (Tax Law § 954(a)(3)). “Taxable gifts” means gifts above the annual exclusion, the kind that would be reported on a federal Form 709. The 2025 amendment extended this rule to estates of decedents dying before January 1, 2032, and treats the incremental tax as a debt of the estate. Gifts made before April 1, 2014, gifts made while the decedent was not a New York resident, gifts of real or tangible property outside New York, and gifts already in the federal gross estate are not added back.

From the gross estate, the estate deducts debts, funeral costs and administration expenses (IRC § 2053), everything that passes outright or in a qualifying trust to a surviving spouse (the marital deduction), and everything that passes to charity. What remains is the New York taxable estate, and that is the number that is compared to $7,350,000.

The cliff, briefly

If the New York taxable estate exceeds 105% of the basic exclusion amount, which is $7,717,500 for 2026, the credit is lost entirely and the whole estate is taxed (Tax Law § 952). A taxable estate of exactly $7,350,000 pays nothing. A taxable estate of $7,717,500 pays about $735,000. Between those two figures the effective marginal rate approaches 200%: the heirs of the larger estate receive less than the heirs of the smaller one. We cover the mechanics and the drafting fixes on our page about the New York estate tax cliff, and you can test your own numbers with our estate tax cliff calculator.

Three things New York does not have

No gift tax, but a three-year add-back

New York has no gift tax. A lifetime gift is a real way to shrink a New York estate, and the federal side is generous: $19,000 per donee per year ($38,000 for a couple that elects gift-splitting) with no return, and a $15,000,000 lifetime exclusion beyond that. The catch is the add-back described above: taxable gifts within three years of death by a resident are pulled back into the New York estate for decedents dying before January 1, 2032. Gifts made earlier than that are gone for good. We explain the trap at New York has no gift tax, but that is not the whole story.

No portability

Federal law lets a surviving spouse inherit the deceased spouse's unused exclusion by filing a timely Form 706. New York has no such rule. A married New Yorker who leaves everything outright to a spouse wastes his or her own $7,350,000 New York exclusion. This is the single biggest reason married couples in New York still need a credit shelter trust. See portability: federal yes, New York no.

No generation-skipping transfer tax

New York repealed its generation-skipping transfer tax effective 2014. Only the federal GST tax applies, at a flat 40% above the $15,000,000 GST exemption. Once assets are out of the New York estate, a dynasty trust can carry them to grandchildren and beyond without a state-level tax at each generation.

The federal deduction for New York estate tax

For the small number of estates that owe both taxes, the New York estate tax paid is deductible on the federal Form 706 under IRC § 2058. The federal rate is 40% and the top New York rate is 16%, but because the state tax reduces the federal taxable estate, the combined top marginal rate is roughly 49.6%, not 56%. For estates under $15,000,000 the federal tax is zero and New York is the only tax in play.

Form ET-706: when it is required and when it is due

The New York estate tax return, Form ET-706, is due nine months after death, the same deadline as the federal Form 706. A return is required if the federal gross estate plus the New York add-back gifts exceed the basic exclusion amount of $7,350,000. The trigger is the gross estate, before deductions, so an estate that leaves everything to a surviving spouse and owes no tax must still file; the return is where the marital deduction is claimed.

The return is also where a New York executor makes the state-only QTIP election. When no federal Form 706 is required (or when a federal QTIP election is made), New York allows the executor to elect qualified terminable interest property treatment for a QTIP trust on Form ET-706 alone. This lets a couple defer New York tax while using the much larger federal exclusion differently, and it is the standard fix for wills whose funding formulas were written with only the federal exclusion in mind. We discuss how the pieces fit together on our A/B trust page.

Worked examples with 2026 numbers

The New York estate tax on a range of taxable estates for a 2026 death:

Consider a widow in Queens with a house worth $3,000,000, a brokerage account of $2,500,000, an IRA of $1,500,000 and a $1,000,000 life insurance policy on her own life. Her husband left everything to her outright, so his New York exclusion was never used. With no spouse and no charitable bequests, her taxable estate is $8,000,000. New York estate tax: about $773,200. Federal tax: zero.

Now suppose that, more than three years before her death, she had transferred the policy to an irrevocable life insurance trust. Her taxable estate is $7,000,000, below the $7,350,000 exclusion, and the New York estate tax is zero. One document and some discipline about premium payments saved her children about $773,200.

What to do about it

Every technique for reducing New York estate tax either takes assets out of the gross estate, routes assets through the marital or charitable deduction, or uses each spouse's exclusion instead of wasting one. The tools we use most often are these; the broader menu is at how to save money on estate taxes.

• A/B trust (credit shelter and marital trust) – The baseline plan for a married couple in New York: uses both spouses' $7,350,000 exclusions instead of one.
• Irrevocable life insurance trust – Removes the death benefit from the taxable estate and provides cash to pay the tax that remains.
• Spousal lifetime access trust – A completed gift that leaves the family with indirect access to the assets through the other spouse.
• Grantor retained annuity trust – Moves future appreciation out of the estate with little or no use of exclusion.
• Family LLC and valuation discounts – Lack-of-control and lack-of-marketability discounts, commonly 20% to 40% combined, on transfers of entity interests.

Related Estate Tax Planning Topics

• The New York estate tax cliff – How the credit phases out between $7,350,000 and $7,717,500, and the drafting fixes that avoid it.
• Portability of the estate tax exemption – Why a federal Form 706 helps the surviving spouse and why it does nothing for New York.
• Form 709: when to file a gift tax return – The federal return that also defines which New York gifts are added back within three years of death.
• Tax basis: step-up and carryover – The income tax side of every estate tax decision, including why gifting the wrong asset can cost more than it saves.

Talk to us about your New York estate tax exposure

If your assets, including your home, your retirement accounts and the face value of your life insurance, add up to somewhere near $7,350,000, a modest amount of planning changes the outcome completely. We will run the 2026 numbers on your estate and show you the least disruptive way to solve the problem. Call us at 212-233-1233 or email [email protected]. We serve clients throughout Manhattan, Brooklyn, Queens, the Bronx, Staten Island, Nassau, Suffolk and Westchester.