Is There a California Estate Tax?

There is a federal estate tax that can be a factor regardless of your location in the United States, but is there a California state estate tax? This is a question that is frequently asked, and we will provide the answer in this post.

The Unfortunate Dozen

State-level estate taxes are the exception rather than the rule. A total of 12 states have their own estate taxes that are separate from the federal estate tax. People in these states could potentially be forced to pay state and federal estate taxes.

Our estate planning office is in Petaluma, California, and there is no state-level estate tax in the Golden State. That’s the good news, but the bad news is that some Californians will still have to be concerned about a state-level estate tax.

If you happen to own property in a state with an estate tax, it would apply to your estate. However, whether your estate would be taxed depends on the value of the property.

There are estate tax exclusions in the states that have this type of tax. This is a set dollar amount that can be transferred before the tax will be imposed on the remainder.

Oregon is one of the states with an estate tax. The exclusion there is the lowest among the states with estate taxes at just $1 million.

There are plenty of California residents who have property in the great state of Hawaii. There is an estate tax there as well, and the exclusion stands at $5.49 million in 2024.

These are the other 10 states with estate taxes:

• Washington
• Connecticut
• Illinois
• Maine
• Maryland
• Massachusetts
• Minnesota
• New York
• Rhode Island
• Vermont

There is also a separate jurisdiction-level estate tax in the District of Columbia.

Federal Estate Tax Parameters

While we are on the subject, we should take a quick look at the federal estate tax. The exclusion on the federal level is $13.61 million this year, and this is the highest it has ever been.

There is a gift tax in place as well, and it is unified with the estate tax. You can give up to $18,000 to an unlimited number of people each year tax-free, and anything that exceeds that amount would cut into your available unified gift and estate tax exclusion.

The estate tax exclusion is portable between spouses, so a surviving spouse can use their deceased spouse’s exclusion. In addition, there is an unlimited marital deduction, so transfers between spouses are not taxed regardless of the amount.

Pending Reduction

The record-high exclusion that we have right now is a product of a provision in the Tax Cuts and Jobs Act. It is going to sunset at the end of 2025, and in 2026, the exclusion will revert to the 2017 level of $5.49 million indexed for inflation.

Schedule a Consultation Today

Our doors are open if you would like to work with a Petaluma, CA estate planning lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 707-769-9975.

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Bridget Mackay

Bridget has been practicing law for over 25 years. After graduating from Santa Clara Law, she spent 10 years as a Deputy District attorney in both Solano and Sonoma Counties. After the birth of her daughter, her priorities changed, and she began a practice in estate planning and Medi-Cal benefits planning. This transition was a natural fit and all her skills of listening, compassion and fearless pursuit on behalf of her clients translated well to this area of law. She lives in Petaluma with her daughter and Australian Shepherd, Joey. Read More!

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