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NEW YORK ESTATE TAX

Updated on January 3, 2024
Written by Ben Geier, CEPF®

Fact Checked by Chris Thompson

The estate tax rate in New York ranges up to 16%. Estates over $6.94 million are
subject to this tax in 2024, up from $6.58 million in 2023.1 Whether you’re
thinking about your own legacy as you enjoy your twilight years or if you’re the
one dealing with figuring out your relative’s legacy, here is your all-in-one
guide to New York estate tax laws. If you think you might be subject to the
estate tax, you may want to consider enlisting the help of a financial advisor
by using SmartAsset’s free financial advisor matching tool.

Next Steps: Trust and estate planning can be overwhelming. We recommend speaking
with a financial advisor. This tool will match you with up to three advisors.

Here's how it works:

* Answer these few easy questions so we can find a match.
* Our tool matches you with qualified, pre-screened advisors who can help you
achieve your financial goals. It only takes a few minutes.
* Check out the advisors' profiles, have an introductory call on the phone or
introduction in person, and choose who to work with in the future.

Please enter your zip code

Find Your Advisor

NEW YORK ESTATE TAX EXEMPTION

The New York estate tax threshold is $6.94 million in 2024 and $6.58 million in
2023. That number will keep going up annually with inflation.

This means that if a person’s estate is worth less than $6.94 million and they
die in 2024, the estate owes nothing to the state of New York. New York has a
“cliff” that impacts very wealthy estates. If the estate exceeds the $6.94
million exemption by less than 5%, it only pays taxes on the amount that goes
over the threshold. If the total value is more than 105% of exemptible amount,
taxes are paid on the entire estate.

Here’s an example of how that works: 105% of $6.94 million is $7,287,000. If
your estate is worth between $6,940,000 and $7,287,000 in 2024, you only pay tax
on the amount that exceeds $6.94 million. So if your estate is worth $6.99
million, your taxable estate is only $50,000. If your estate surpasses
$7,287,000, all of your estate is taxable. So if your total estate is $7.75
million, for example, you will pay estate taxes on all of that.

NEW YORK ESTATE TAX RATE

The estate tax rate for New York is graduated. It starts at 3.06% and goes up to
16%. The taxable estate is the value of the estate above the $6.94 million
exemption (unless the estate reaches that cliff of 105% of $6.94 million, then
the whole estate is taxable). Here’s how to figure out what you’ll be paying:
First, figure out what your taxable estate is. If your total estate is worth
less than $7,287,000, the taxable estate is the total amount minus $6.94
million.

Next, find your taxable estate bracket in the chart below. The base taxes amount
in the second column is what you owe on money that falls below your tax bracket.
Then figure out by how much your estate exceeds the lower limit of your bracket
and multiply that number by the marginal rate. Add that number to your base and
you should know what you owe.

Here’s an example: Let’s say your total estate is worth $8 million. That exceeds
the $7,287,000 cliff, so all of it is taxable. Next, we find where that number
falls on the chart. The base tax for the bracket is $650,800. The bottom of the
threshold is $7.1 million, so we subtract that from $8 million and get $900,000.
That amount multiplied by the marginal rate of 13.6% is $122,400. When we add
that number to the base tax, we get a total tax of $773,200 on an $8 million
estate.

NEW YORK ESTATE TAX RATES

Taxable Estate*Base Taxes PaidMarginal RateRate Threshold**$1 –
$500,000$03.06%$1$500,000 – $1 million$15,3005.0%$500,000$1 million – $1.5
million$40,3005.5%$1 million$1.5 million – $2.1 million$67,8006.5%$1.5
million$2.1 million – $2.6 million$106,8008.0%$2.1 million$2.6 million – $3.1
million$146,8008.8%$2.6 million$3.1 million – $3.6 million$190,8009.6%$3.1
million$3.6 million – $4.1 million$238,80010.4%$3.6 million$4.1 million – $5.1
million$290,80011.2%$4.1 million$5.1 million – $6.1 million$402,80012.0%$5.1
million$6.1 million – $7.1 million$522,80012.8%$6.1 million$7.1 million – $8.1
million$650,80013.6%$7.1 million$8.1 million – $9.1 million$786,80014.4%$8.1
million$9.1 million – $10.1 million$930,80015.2%$9.1 millionOver $10.1
million$1.082 million16%$10.1 million

*The taxable estate is the amount above the 2024 exemption of $6.94 million.
**The rate threshold is the point at which the marginal estate tax rate goes
into effect.

WHAT IS THE ESTATE TAX?

Estate tax is what it sounds like: a tax levied on the estate of a deceased
person prior to being dispersed to their heirs. You may have heard it referred
to as the “death tax.” It does not apply to all estates, only those that reach a
certain threshold of value, and that value differs from state to state.

Estate tax should not be confused with inheritance tax. Inheritance tax is money
paid by the person who received the money once it has been dispersed. Estate tax
is taken by the government from the estate of the deceased before their heirs
receive it.

NEW YORK INHERITANCE TAX

There is no inheritance tax in New York. If you’re getting money from a
relative, you don’t have to give any of it to New York state. If the person who
died lived in another state, though, make sure to check that state’s inheritance
tax rules in case they apply to you.

For example, Pennsylvania has an inheritance tax that may apply to you if the
person leaving you an inheritance lived in the Keystone State.2

NEW YORK GIFT TAX

New York does not currently have a gift tax, meaning that if someone wants to
avoid their estate having to pay high taxes, they can give away money as gifts
before they die. One important caveat, though: gifts made within three years
before the person dies are counted toward establishing a person’s estate total,
so you can’t give all your money to someone on your deathbed to avoid paying
taxes.

The federal gift tax exemption is $18,000 per recipient for 2024, up from
$17,000 in 2023. Any gift to a single person in one year that exceeds that
amount will count against your 2024 lifetime exemption of $13.61 million.

NEW YORK ESTATE TAX FOR MARRIED COUPLES

When someone dies, money that goes to their spouse is not subject to the estate
tax in New York or at the federal level (more on this in the section below).
When the second spouse dies, any amount of the estate exceeding $6.94 million
will be subject to normal New York estate tax rules, i.e. the New York estate
tax exemption is not portable between spouses.

Some couples will try to partially get around this by establishing a trust equal
to the estate tax exemption and exposing it to the estate tax upon the first
spouse’s death, meaning that money won’t be taxed when the second spouse dies.

FEDERAL ESTATE TAX

There is also a federal estate tax. The federal estate tax kicks in at $13.61
million in 2024. On the federal level, the estate tax exemption is portable
between spouses. This means that with the right legal steps, a married couple’s
estate exemption can be doubled when the second spouse dies. So a couple could
protect up to $27.22 million of their estate from federal estate taxes in 2024.3

For those estates that still exceed this amount, the tax rate tops out at 40%.
The chart below has the full list of graduated tax rates.

You can use the same process described above in the New York Estate Tax section
to figure out your federal estate tax burden.4

FEDERAL ESTATE TAX RATES

Taxable Estate*Base Taxes PaidMarginal RateRate Threshold**$1 –
$10,000$018%$1$10,000 – $20,000$1,80020%$10,000$20,000 –
$40,000$3,80022%$20,000$40,000 – $60,000$8,20024%$40,000$60,000 –
$80,000$13,00026%$60,000$80,000 – $100,000$18,20028%$80,000$100,000 –
$150,000$23,80030%$100,000$150,000 – $250,000$38,80032%$150,000$250,000 –
$500,000$70,80034%$250,000$500,000 – $750,000$155,80037%$500,000$750,000 –
$1,000,000$248,30039%$750,000Over $1,000,000$345,80040%$1,000,000

*The taxable estate is the total above the 2024 exemption of $13.61 million.
**The rate threshold is the point at which the marginal estate tax rate kicks
in.

OVERALL NEW YORK TAX PICTURE

New York is a moderately tax-friendly state for retirees. Social Security is not
taxed. New York income tax rates range from 4.00% to 10.90%. Money from pensions
or other retirement accounts are deductible up to a certain amount. New York
City also collects its own local income taxes. If you live within the five
boroughs, keep that in mind. You can see what your take home pay is with taxes
considered using SmartAsset’s New York paycheck calculator.

The overall effective property tax rate in New York is 1.73%. The state sales
tax rate is 4%, but this can get as high as 9% in certain areas when various
county and city rates are considered.

ESTATE PLANNING TIPS

* If all of this is confusing to you, there are professionals who can help,
such as a financial advisor. Finding a financial advisor doesn’t have to be
hard. SmartAsset’s free tool matches you with up to three vetted financial
advisors who serve your area, and you can interview your advisor matches at
no cost to decide which one is right for you. If you’re ready to find an
advisor who can help you achieve your financial goals, get started now.
* When writing a will, make sure you name a guardian for your children. It
isn’t pleasant to think about, but taking care of the non-financial aspects
of your estate allows you to have peace of mind and to focus on other parts
of your financial planning.

SOURCES

1. “Estate Tax.” New York Department of Taxation and Finance, December 2023.
https://www.tax.ny.gov/pit/estate/etidx.htm.
2. Pennsylvania Department of Revenue. “Inheritance Tax.”
https://www.revenue.pa.gov:443/TaxTypes/InheritanceTax/Pages/default.aspx.
3. “Frequently Asked Questions on Estate Taxes.” Internal Revenue Service,
November 21, 2023.
https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes.
4. “Estate Tax.” Internal Revenue Service, November 23, 2023.
https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax.

Ben Geier, CEPF®Ben Geier is an experienced financial writer currently serving
as a retirement and investing expert at SmartAsset. His work has appeared on
Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and
a part-time student at the City University of New York Graduate Center. He is a
Certified Educator in Personal Finance® (CEPF®) and a member of the Society for
Advancing Business Editing and Writing. When he isn’t helping people understand
their finances, Ben likes watching hockey, listening to music and experimenting
in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with
his wife.
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