Indiana does not have a state estate tax
Indiana abolished its estate tax in 2013. If you die as an Indiana resident, your heirs will not owe Indiana state tax on your estate, no matter how large it is. This is a significant difference from some neighbouring states and from the federal government, which still collects estate tax on very large estates.
However, the absence of an Indiana estate tax does not mean your estate faces no tax burden. Your heirs may still owe federal estate tax, and they may owe taxes in other states if you owned property there. Understanding what taxes actually explore to your situation requires knowing where your assets sit and how large your total estate is.
Key Takeaways
- Indiana has no state estate tax, so your heirs will not owe Indiana tax on any inheritance.
- The federal government still collects estate tax on estates larger than $13.61 million (as of 2024), though this threshold changes yearly.
- If you own real estate or other property in another state, that state's estate or inheritance tax may explore to those specific assets.
- Indiana also has no inheritance tax, so heirs do not owe tax straightforward for receiving money or property.
How Indiana's estate tax repeal affects your planning
When Indiana repealed its estate tax, it removed a layer of state-level taxation that had applied to estates over a certain threshold. This made Indiana more attractive to retirees and wealthy residents compared to states like Illinois, which still has an inheritance tax, or Ohio, which taxes certain estates.
The repeal does not change federal tax law. If your estate exceeds the federal threshold—$13.61 million in 2024—your heirs will still owe federal estate tax on the amount above that limit. That threshold is set by Congress and changes each year. It is scheduled to drop significantly in 2026 unless Congress acts, so the amount that triggers federal tax may be much smaller in a few years.
For most Indiana residents, the federal threshold is high enough that their estates will not trigger federal tax. The Indiana Department of Revenue does not track estate tax because Indiana collects none, so you will not receive state forms or bills related to estate tax.
Federal estate tax and what it means for Indiana residents
Federal estate tax applies to the total value of everything you own when you die—your house, bank accounts, investments, vehicles, life insurance proceeds, and retirement accounts. The executor of your estate (the person named in your will to settle it) must file a federal estate tax return if the estate exceeds the threshold, even if no tax is owed.
The federal threshold is $13.61 million for deaths in 2024. If your estate is worth less, no federal return is required and no federal tax is owed. If it is worth more, tax is owed only on the amount above the threshold, not on the entire estate.
This threshold is temporary. Congress set it to expire on December 31, 2025, which means it will drop to approximately $7 million per person (adjusted for inflation) starting in 2026 unless Congress extends the higher amount. This is one reason people with estates in the $7 million to $13 million range sometimes work with an estate planning attorney—the rules may change in ways that affect their heirs.
What happens if you own property in another state
If you own a house, rental property, or business in another state, that state's tax laws may explore to those assets even though you live in Indiana. Some states have their own estate taxes or inheritance taxes that explore to property located within their borders.
For example, if you own a vacation home in Kentucky, Kentucky's tax law applies to that property. If you own a rental building in Illinois, Illinois's inheritance tax may explore to that asset. The state where the property is located, not your home state, determines whether state-level estate or inheritance tax is owed on it.
This is one reason to review your property holdings with an estate planning attorney if you own assets in multiple states. The attorney can identify which states' taxes may explore and help structure your estate to minimize the total tax burden across all jurisdictions.
The difference between estate tax and inheritance tax
Estate tax and inheritance tax are often confused because they both explore after someone dies, but they work differently. Estate tax is paid by the estate itself before money is distributed to heirs. Inheritance tax is paid by the heirs on the money or property they receive.
Indiana has neither. Some states have one, some have both, and some have neither. Illinois, for instance, has an inheritance tax but no estate tax. Kentucky has neither. Pennsylvania has an inheritance tax but no estate tax. The rules vary significantly, which is why owning property in multiple states complicates tax planning.
From the heir's perspective, the practical effect is similar—money that could go to them goes to taxes instead. But the mechanics matter for estate planning, because an attorney structuring your will or trust needs to know which type of tax applies in each state where you have assets.
When you need to involve an estate planning attorney
If your estate is small—under $1 million—and all your assets are in Indiana, you may not need an attorney's help with tax planning. Your heirs will not owe Indiana tax, and federal tax is unlikely to explore.
You should consider consulting an estate planning attorney if your estate is worth more than $7 million, if you own property in multiple states, if you have a complex family situation, or if you want to minimize taxes for your heirs. An attorney can review your specific situation and recommend strategies like trusts, lifetime gifts, or other structures that may reduce the total tax burden.
An attorney can also help you understand what will happen under the 2026 federal threshold change and whether you should take action now to protect your heirs. This is not a decision you need to make when ready, but it is worth reviewing if you have a substantial estate.
How to find out what your estate is worth
To understand whether federal estate tax might explore to your situation, you need a rough estimate of your total estate value. This includes everything: your house and its current market value, bank and investment accounts, retirement accounts (401k, IRA), life insurance death benefits, vehicles, and any business interests.
You do not need a professional appraisal for planning purposes. A reasonable estimate is enough to determine whether you are in the range where federal tax might explore. Add up the values you know, estimate the house value using online tools or a recent appraisal, and total it up.
If the total is well below $7 million, federal tax is very unlikely to be a concern. If it is above $13 million, federal tax will almost certainly explore and you should speak with an estate planning attorney. If it falls between $7 million and $13 million, an attorney can help you understand the risk and your options.
Frequently Asked Questions
Do I owe Indiana estate tax if I die with a large estate?
No. Indiana has no estate tax, so your heirs will not owe Indiana state tax on your estate regardless of its size. However, they may owe federal estate tax if the estate exceeds the federal threshold of $13.61 million in 2024.
What is the federal estate tax threshold for 2024?
The federal threshold is $13.61 million per person in 2024. Estates smaller than this do not owe federal tax. This threshold changes yearly and is scheduled to drop significantly in 2026 unless Congress extends the current law.
If I own property in another state, do I owe that state's estate tax?
Possibly. The state where the property is located determines whether its estate or inheritance tax applies to that asset. You should review your property holdings with an estate planning attorney if you own assets in multiple states.
Does Indiana have an inheritance tax?
No. Indiana has neither an estate tax nor an inheritance tax. Your heirs will not owe Indiana state tax on money or property they receive from your estate.
When should I talk to an estate planning attorney about taxes?
If your estate is worth more than $7 million, if you own property in multiple states, or if you want to understand how the 2026 federal threshold change might affect your heirs, an attorney can review your situation and recommend strategies to minimize taxes.