The federal tax expired on Jan. 1, 2010, and is supposed to spring back to life on Jan. 1, 2011, with just
$1 million per estate exempt from a stiff 55% tax. But there's still a chance the tax might be restored
retroactively, to its 2009 state, which included a $3.5 million per person estate tax exemption.
To be fair, some of the state uncertainty is linked to the federal mess. For example, North Carolina's state
estate tax, which lapsed along with the federal tax on Jan. 1, will automatically be restored for 2010 with the
same exemption as the federal tax, if and when the federal tax is reinstated. Illinois' tax, too, died with the
federal tax. But legislation now pending in Springfield would reinstate the Illinois tax retroactively to Jan.
1, 2010, with a $2 million exemption for 2010, regardless of what Congress does. The bill would then tie the
Illinois exemption to the federal estate tax exemption, whatever that may be, starting next year.
Leaving out Illinois and North Carolina, 19 states and the District of Columbia currently impose their own
estate and/or inheritance taxes, and some of them tax fairly modest estates.
Eleven states and Washington, D.C., have estate taxes only. Six states levy only an inheritance tax, with
the rate depending on the relationship of the heir to the deceased. New Jersey and Maryland levy both estate
and inheritance taxes.
What might happen for 2011 and beyond? "The states' reaction will depend on what happens federally," says
Kathleen Thiess, an analyst with tax publisher CCH, adding that it's likely that many states will revisit this
in their 2011 legislative sessions.
Hover over a state to see the dollar amount exempted from taxes and the top tax