In Maryland, surviving spouses and direct heirs are exempt from inheritance tax. Nephews, nieces, uncles, aunts, cousins, and non-relatives pay a 10% tax on inherited property. Life insurance benefits and property passing to one person valued at less than $1,000 are exempt. Also, if the estate qualifies for Small Estate probate proceedings, no inheritance tax is charged to any beneficiaries.
Nebraska does not charge inheritance tax to surviving spouses. Parents, grandparents, children, and other lineal descendants pay a 1% tax on assets over $100,000. Other relatives will pay an 11% tax rate on $40,000 or more. Non-relatives pay 15% with a $25,000 exemption.
New Jersey assesses inheritance tax when the decedent passed as a legal resident of the state or owned property in the state. Surviving spouses, children, grandchildren, and parents are exempt. Siblings and children-in-law pay inheritance tax rates of 11% to 16% on assets worth more than $25,000.
Pennsylvania also exempts surviving spouses and children under 21. Direct descendants and lineal heirs pay a 4.5% inheritance tax, and siblings pay 12%. Other heirs pay 15%. Property owned jointly by spouses is exempt from the tax, and some farmland may also be exempt.
In Iowa, the 2024 inheritance tax rates ranged from 0% to 3%, depending on the beneficiary's relationship to the decedent. The closest relatives paid no tax, while others paid 1% to 3% with no exemption threshold.
Calculating inheritance taxes
Some states charge a flat tax rate on all inherited, non-exempt property. In these states, the calculations are straightforward: Multiply the tax rate by the fair market value of the non-exempted property. If you have $15,000 of assets subject to Maryland's 4.5% inheritance tax, for example, the tax bill should be $675.
The calculations are more complicated in Kentucky and New Jersey, which have tax rates that increase based on the value of the inherited assets. These tax tables function like federal income tax rates -- depending on the value of the inheritance, you may need to apply multiple tax rates and sum the results.
To demonstrate, let's say you live in Kentucky and have $50,000 in assets to bequeath to your niece. The table below shows Kentucky's inheritance tax schedule for "Class B" beneficiaries and the calculations to apply it to $50,000 in assets.
