4. Illinois
- Estate tax: Yes
- Estate tax exemption level: $4 million
- Estate tax rates: between 0.8 percent and 16 percent
- Inheritance tax: No
- Inheritance tax rates: N/A
Illinois is considered one of the worst states to live in when it comes to taxes and its residents probably agree with this statement. They aren’t surprised to hear neither that the state has an estate tax. However, when compared to other states listed in this post, Illinois’ exemption amount is not that big: $4 million.
Plus, the amount is not adjusted annually for inflation as in other states.
5. Iowa
- Estate tax: No
- Estate tax exemption level: N/A
- Estate tax rates: N/A
- Inheritance tax: Yes
- Inheritance tax rates: between 5 percent and 15 percent
If your estate is actually worth less than $25,000, you’re good, because Iowa doesn’t apply its inheritance tax in this case. Another great thing is that no tax is due on properties that are inherited by a grandparent, a spouse, parent, great-grandparent, grandchild, children, stepchild, great-grandchild, or other lineal ascendant or descendant.
However, the tax is not that friendly when it comes to other heirs such as brothers, sons/daughters-in-law, and sisters. They will face a 5 percent to 10 percent tax which depends on the real value of the inherited property.
Also, if you’re the nephew of the deceased, don’t be so happy: aunts, uncles, nieces, and of course nephews are hit the hardest. The rates range for them from 10 percent to 15 percent. So, do you still want that property?
6. Kentucky
- Estate tax: No
- Estate tax exemption level: N/A
- Estate tax rates: N/A
- Inheritance tax: Yes
- Inheritance tax rates: between 4 percent and 16 percent
Just like Iowa, the Kentucky inheritance tax is based on the heir’s relationship with the deceased and the real value of the property he or she inherited. For example, the inheritance tax shouldn’t scare you if you’re the decedent’s spouse, children, sibling, parent, or grandchildren—you don’t have to pay it.
But for other heirs such as sons/daughters-in-law, uncles, aunts, nephews, nieces, and great-grandchildren, the tax is a complete nightmare. For them, the rates range from 4 percent to 16 percent, depending on the real value of the property they inherited.
When it comes to other heirs, the rates for them are between 6 percent and 16 percent.
