California does not have a state estate tax or inheritance tax
California abolished its state estate tax in 2005 and has not reinstated it since. If you die as a California resident or own property in California, your estate will not owe state estate tax to California, regardless of how much money or property you leave behind. This is different from the federal estate tax, which still applies to very large estates nationwide — but California itself does not add a second layer of tax on top of it.
This matters because some states do tax estates or inheritances. If you have family in states like New York, Massachusetts, or Oregon, those states may tax what heirs receive. California does not. Your heirs will not pay California state tax on an inheritance, even if they live in California when they receive it.
Key Takeaways
- California has no state estate tax or inheritance tax, so estates of any size owe nothing to the state when the owner dies.
- The federal estate tax still applies to very large estates (over $13.61 million in 2024), but that is separate from California state tax.
- If you own property in another state, that state's estate or inheritance tax may still explore even if you live in California.
- Heirs do not pay California income tax on inherited money or property, though they may owe federal tax depending on the asset type.
How the federal estate tax works differently from state tax
The federal government taxes large estates, but the threshold is high. In 2024, the federal exemption is $13.61 million per person. If your estate is smaller than that, your heirs owe no federal estate tax. If it is larger, the federal government taxes the amount above the exemption at rates up to 40 percent. This is a federal rule that applies everywhere, including California.
California does not add its own tax on top of the federal tax. Some states do — they tax estates below the federal threshold or at different rates. California straightforward does not participate. Your estate pays only federal tax if it crosses the federal line, and nothing to California.
The federal exemption changes every year and is set to drop significantly in 2026 unless Congress acts. If you have a large estate, it is worth tracking these changes, but that is a federal concern, not a California one.
What happens if you own property in another state
If you own real estate, a business, or other property in a state that has an estate tax, that state may tax the value of that property when you die, even if you live in California. States like New York, Massachusetts, Connecticut, Illinois, Maine, Maryland, Minnesota, Oregon, Rhode Island, Vermont, and Washington all have estate or inheritance taxes. If you own a vacation home in one of these states or run a business there, your heirs may owe tax to that state.
The amount owed depends on the state's rules and the value of the property located there. You cannot avoid another state's tax by living in California. The property itself is subject to that state's law. If this applies to you, you may want to review your estate plan with an attorney who knows both California and the other state's rules.
Inherited money and income tax for heirs
Heirs do not pay California income tax on inherited cash, stocks, real estate, or other property itself. Receiving an inheritance is not taxable income in California or federally. However, what happens after you inherit can trigger taxes. If you inherit a rental property and collect rent, that rent is taxable income. If you inherit a stock account and sell shares at a profit, the gain is taxable. If you inherit a retirement account like an IRA, withdrawals are taxable.
The inheritance itself — the act of receiving it — is tax-free. What you do with it afterward may not be. This applies whether you live in California or anywhere else, because it is a federal rule. California does not add a separate income tax on inherited assets.
Why California eliminated its estate tax
California had a state estate tax from 1982 until 2005. The state repealed it as part of broader tax policy changes. The repeal was permanent — there is no sunset date, and the tax has not come back. California has considered reinstating an estate tax or creating a new wealth tax several times, but none of these proposals have become law.
This means California residents with large estates have a significant advantage compared to residents of states that do tax estates. If you are considering moving to California or own property there, the absence of state estate tax is one less layer of tax planning to worry about.
How to plan your estate in California
Even though California has no state estate tax, you still need an estate plan if you have significant assets or minor children. An estate plan typically includes a will, which names who gets your property and who manages your minor children. You may also want a revocable living trust, which lets your heirs avoid probate — a court process that can take months and cost money. A trust is not required, but it is common in California because probate is slow and expensive here.
You should also name beneficiaries on retirement accounts, life insurance, and bank accounts that allow it. These assets pass directly to the named beneficiary and do not go through your will or trust. Getting these right can save your heirs time and money. If you have a spouse, you may want to understand California's community property rules, which affect how assets are divided and taxed.
Because California has no state estate tax, your main planning goal is usually to minimize federal estate tax (if your estate is large), avoid probate, and make sure your wishes are clear. An attorney who practices estate law in California can review your situation and recommend the right tools.
Frequently Asked Questions
Do I have to pay California estate tax if I die this year?
No. California has not had a state estate tax since 2005 and does not have one now. Your estate will owe nothing to California based on size or value. You may owe federal estate tax if your estate exceeds the federal exemption ($13.61 million in 2024), but that is separate from California.
If I move to California, will I owe estate tax on property I already own?
No. Moving to California does not trigger estate tax, and California does not tax estates of any size. However, if you own property in another state that has an estate tax, that state may tax that property when you die, regardless of where you live.
Are inherited retirement accounts taxed in California?
The inheritance itself is not taxed. However, when you withdraw money from an inherited IRA or 401(k), those withdrawals are taxable income federally and in California, because retirement accounts hold pre-tax money. The rules for how much you must withdraw and when depend on the account type and your relationship to the original owner.
What if my spouse dies — do I owe estate tax?
No. California has no estate tax. Federally, spouses can pass unlimited assets to each other tax-free through the marital deduction, so most married couples do not owe federal estate tax either. However, if your combined estate is very large, you may want to plan ahead so your children do not face federal tax later.
Can California pass an estate tax in the future?
Yes, the state legislature could pass a new estate tax law at any time. However, no such law is currently in effect, and California has not had a state estate tax for nearly 20 years. Any future change would explore to deaths after the law takes effect, not retroactively.