New York does not have an inheritance tax
New York State does not charge an inheritance tax on money or property you receive from someone who has died. This is true whether the person who died lived in New York or elsewhere. You will not owe New York State tax straightforward because you inherited something.
However, New York does have an estate tax, which is different. An estate tax is paid by the estate itself—the total value of everything the deceased person owned—before money is distributed to heirs. If you are an heir, you need to understand whether the estate is large enough to trigger this tax, because it affects how much reaches you.
The federal government also has an estate tax with its own threshold. Some estates owe both federal and New York State tax. Others owe neither.
Key Takeaways
- New York State has no inheritance tax, so you pay nothing to the state on what you inherit.
- New York State does have an estate tax that applies to estates worth more than $6.94 million (as of 2024), and this tax is paid by the estate before distribution to heirs.
- The federal government has a separate estate tax with a threshold of $13.61 million per person (as of 2024), and these thresholds change yearly.
- An executor or estate administrator will handle estate tax filings; you do not file them yourself as an heir.
- If you are unsure whether an estate owes tax, the person managing the estate should consult a tax professional or attorney.
How New York's estate tax works
New York's estate tax applies only to estates—the total value of property, bank accounts, investments, and other assets owned by the person who died. The tax is owed by the estate, not by individual heirs. The estate must file a return and pay the tax before money is distributed to you and other beneficiaries.
As of 2024, New York's estate tax applies to estates worth more than $6.94 million. This threshold increases slightly each year. If an estate is worth less than this amount, no New York State estate tax is owed, and the estate does not need to file a state estate tax return.
The tax rate on estates that do owe tax ranges from 3.06% to 16%, depending on how much the estate is worth. Larger estates pay a higher percentage. The person managing the estate—called the executor or administrator—is responsible for calculating and paying this tax.
Federal estate tax and how it differs from New York's
The federal government also taxes large estates, but the threshold is much higher than New York's. As of 2024, the federal estate tax applies only to estates worth more than $13.61 million per person. This means most estates do not owe federal tax.
The federal threshold is set by Congress and changes periodically. It is scheduled to drop significantly after 2025, but that may change if Congress acts. An estate that owes New York State tax may or may not owe federal tax, depending on its total value.
The executor or administrator will file both returns if needed. You, as an heir, do not file federal or state estate tax returns yourself. Your only concern is how much of the estate reaches you after taxes and other debts are paid.
When an estate must file a New York tax return
An estate must file a New York State estate tax return only if its value exceeds the threshold—currently $6.94 million. The executor or administrator determines the estate's value by adding up all assets as of the date of death. This includes real estate, bank accounts, investments, life insurance proceeds, retirement accounts, and anything else of value.
Some assets pass directly to beneficiaries outside the estate—for example, life insurance with a named beneficiary or a bank account marked "payable on death." These assets still count toward the estate's total value for tax purposes, even though they do not go through the probate process.
If you are an executor or administrator and are unsure whether the estate exceeds the threshold, a tax professional or estate attorney can help you calculate the value and determine whether a return is required.
What happens if an estate owes tax
If an estate owes New York State estate tax, the executor or administrator must file a return with the New York Department of Taxation and Finance. The return is due within nine months of the person's death, though an extension can be requested.
The estate must pay the tax from its assets before distributing money to heirs. This means the amount you receive may be reduced by the estate tax owed. For example, if an estate is worth $10 million and owes $300,000 in New York State tax, the remaining $9.7 million is divided among heirs according to the will or state law.
The executor or administrator handles all of this. As an heir, you will typically receive a statement showing how much the estate was worth, what taxes and debts were paid, and what amount is being distributed to you.
Gifts during someone's lifetime versus inheritance after death
New York has no gift tax. This means if someone gives you money or property while they are alive, you owe no tax to New York State on that gift, no matter how large it is.
The federal government does have rules about large gifts, but these are separate from the estate tax and work differently. A gift during someone's lifetime does not count as income to you for tax purposes. The person giving the gift may need to file a federal form if the gift is very large, but you do not owe tax on it.
Inheritance after someone dies is also not considered income to you for federal or state tax purposes. You do not report it on your personal income tax return.
How to learn about an estate owes tax
If you are an heir and want to know whether the estate owes New York State tax, ask the executor or administrator. They should be able to tell you the total value of the estate and whether it exceeds the $6.94 million threshold.
If the executor or administrator is uncertain, they can contact the New York Department of Taxation and Finance or hire a tax professional or estate attorney. The New York Department of Taxation and Finance website has information about estate tax thresholds and filing requirements, and you can also call their estate tax line with questions.
If you are the executor or administrator yourself, you may want to consult a tax professional or attorney, especially if the estate is large or complex. The cost of professional help is usually paid from the estate's assets.
Frequently Asked Questions
Do I have to pay New York State tax on money I inherit?
No. New York has no inheritance tax. You do not owe the state any tax on what you inherit. The estate itself may owe estate tax if it is large enough, but that is paid by the estate before money reaches you.
What is the difference between an inheritance tax and an estate tax?
An inheritance tax is paid by the person who receives the money or property. An estate tax is paid by the estate—the total value of everything the deceased person owned. New York has an estate tax but no inheritance tax. Only a few states still have inheritance taxes.
If I inherit money from someone who lived outside New York, do I owe New York tax?
No. Where the person lived does not matter. New York has no inheritance tax on heirs. If the estate is large enough to owe New York State estate tax, that is handled by the estate itself, not by individual heirs.
What if the estate is worth exactly $6.94 million?
The New York estate tax applies to estates worth more than $6.94 million, not estates worth exactly that amount. An estate worth $6.94 million or less does not owe New York State estate tax. The threshold increases slightly each year, so check the current year's amount if you are planning.
Can I reduce the estate tax by giving money away before I die?
Gifts during your lifetime do not count toward the estate tax threshold. However, this is a complex area of tax law, and the rules change. If you are concerned about estate tax, speak with an estate attorney or tax professional about your specific situation.