News & Trending Tax News

10 States That Don't Have Inheritance Taxes

Other kinds of taxes and day-to-day expenses still pack a wallop.

By Stacy Garrels

Edited by Amanda Machado

Updated Dec. 24, 2025

Collecting an inheritance, we're told, should be a blessed event. The circumstances are tragic, but it's still a free cash gift, right?

Reality is, inheriting free money can be a stressful and expensive event. There are distributions to manage, and the taxman has to get paid.

While only a handful of states impose a true inheritance tax, no inheritance tax doesn't mean that heirs get off scot-free. Plenty of states that skip inheritance taxes still impose estate taxes, high sales taxes, high property taxes, or a cost of living that far offsets any tax-free inheritance gains.

Below are 10 states with no inheritance tax and the hidden "gotchas" retirees should keep on their radar so they can make the right money moves.

Learn 7 ways to generate income with a $1,000,000 portfolio

Learn the strategies wealthy retirees use to fund their retirement with $1,000,000 — and how you can, too — with this new guide: The Definitive Guide to Retirement Income from Fisher Investments.

Fisher Investments has helped tens of thousands of investors retire comfortably since 1979. With over $332 billion under management, they provide tailored money management to help achieve long-term goals.

Get your guide here

What inheritance taxes actually are

Levied at the state level, inheritance taxes are placed on next of kin or heirs receiving assets from the deceased. The tax is based on how much the individual receives and their relationship to the deceased.

Most states no longer impose this tax, but those that do may charge higher rates to distant relatives or unrelated heirs. Families who understand these basics can plan ahead and avoid costly surprises.

Who really has the cheapest auto insurance in your area? Check your zip code here.

Estate tax vs. inheritance tax

Estate taxes are calculated based on the value of the entire estate and paid by the estate before the distribution of any assets. An executor or estate administrator handles these transactions.

Inheritance taxes, however, are paid by individual beneficiaries for the assets that they personally receive. There's no one appointed to oversee distribution; the heir takes possession of any remaining cash or other assets.

Florida

Florida doesn't have an inheritance or estate tax, which makes it one of the most wealth-friendly states for retirees.

But the state's "no tax" reputation can be misleading. Home insurance costs are among the highest in the country, and property taxes vary widely by county, meaning retirees could still face steep annual expenses even if heirs avoid tax bills.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

Texas

Texas has no inheritance or estate tax, and it also lacks a state income tax, which is a huge draw for retirees. This doesn't make the state affordable. Texas property taxes are some of the highest in the country. Without careful planning, maintaining inherited property can quickly become expensive.

Nevada

Nevada skips both inheritance and estate taxes, making it attractive for families looking to protect generational wealth. But sales taxes are among the highest nationwide, and property taxes — while moderate — can increase with development.

Heirs may not inherit the same tax-friendly environment that today's retirees enjoy.

Arizona

Arizona does not impose inheritance or estate taxes, but state income taxes do apply to 401(k) and IRA distributions, along with other retirement income sources.

Property taxes are among the lowest in the nation, which helps keep long-term costs stable. Still, capital gains from selling inherited property may be taxable, creating unexpected bills for heirs planning to liquidate assets.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

Alaska

Alaska has neither inheritance nor estate taxes — and no state income tax or statewide sales tax. It's one of the most tax-efficient states in America. The downside? Alaska's cost of living, healthcare, and home-heating expenses are extremely high. Heirs won't face inheritance taxes, but retirees may spend more throughout their lifetimes than they would living in other parts of the country.

Wyoming

Wyoming consistently ranks as one of the most tax-friendly states in the nation, with no inheritance, estate, or income tax. Trust laws are also highly favorable.

The catch comes from high property insurance costs and limited healthcare access in rural areas. Retirees may save on taxes but spend more to ensure adequate coverage.

South Dakota

South Dakota has no inheritance tax and offers strong trust protections, which makes it a popular destination for estate planning.

Property taxes, however, can be unpredictable and vary significantly based on property type or home value.

There's also a state sales tax on groceries and essentials, increasing everyday living costs for retirees aging in place.

Get instant access to hundreds of discounts

Over 50? Join AARP today— because if you’re not a member you could be missing out on huge perks like discounts on travel, dining, and even prescriptions.

Get 25% off membership — just $15 for your first year with auto-renewal — and a free gift if you join today.

Become an AARP member now

New Hampshire

New Hampshire charges no inheritance or estate tax, and it has no tax on earned income or sales.

Its property taxes, however, are some of the highest in the country, which can shock heirs who inherit real estate. Retirees often underestimate how much maintaining or transferring property will cost in this otherwise tax-friendly state.

Tennessee

Tennessee has eliminated its inheritance and estate taxes, and it also does not tax earned income.

The state, however, funds its coffers from other sources. Tennessee's sales tax rate — especially on groceries — is among the steepest nationwide.

Retirees may enjoy low taxes on assets, but high day-to-day costs can erode savings long before any wealth transfer occurs.

South Carolina

South Carolina imposes no inheritance tax and offers relatively low property taxes, which is appealing for retirees. But state income taxes still apply to many retirement distributions, and capital gains from inherited real estate can create taxable events.

Heirs may not owe a "death tax," but selling assets too quickly can trigger avoidable taxes.

Avoid These Money Mistakes: 6 ways seniors are throwing away money every day

Bottom line

Even in states with no inheritance tax, other taxes and high costs of living can still impact your family's wallet.

Property taxes and insurance premiums may skyrocket, capital gains can apply when heirs sell inherited property, and some states still tax retirement income.

Inheritance taxes themselves may be rare, but other hidden costs lurk within the broader tax ecosystem.

Grasping these nuances allows families to keep more money in their wallets. Before making major estate decisions, consider consulting a financial advisor who can help you check up on your retirement plan and construct a broader long-term financial strategy.

More from FinanceBuzz: