State estate tax: NoState inheritance tax: Yes
Most states have no estate or inheritance tax, so only the federal estate tax applies. Kentucky is different: it has its own inheritance tax. State thresholds are often far below the federal exemption, so a family here can owe the state even when it owes the IRS nothing.
The Kentucky inheritance tax
Kentucky has an inheritance tax, which works differently from an estate tax: the people who receive the inheritance pay it, and the rate depends on how closely they were related to the person who died. Close family usually pays a lower rate or nothing; distant relatives and non-relatives pay more.
How federal and state fit together
The federal estate tax has a high exemption (~$15M per person, ~$30M per couple in 2026), so most families never owe it. State taxes like Kentucky's set their own thresholds, usually lower, and their own rules. You can owe the state, the IRS, both or neither - each is figured separately.
How gifting helps
Giving during your life shrinks your taxable estate, federal and state. What you give, and what it would have grown into, is out of the estate. Federally, you can give $19,000 per recipient per year with no filing at all. Start by tracking what you give and projecting where the estate is headed.
See whether your estate is on track to cross a threshold with the Estate Tax Projector, and keep your gifting within the annual exclusion with the Gift Tax Calculator.
Other states with a death tax
You can owe state estate or inheritance tax in any of these states, each with its own thresholds and rules:
Connecticut · District of Columbia · Hawaii · Illinois · Maine · Maryland · Massachusetts · Minnesota · Nebraska · New Jersey · New York · Oregon · Pennsylvania · Rhode Island · Vermont · Washington
General information, not tax or legal advice. State death-tax rules and thresholds change and this page does not state specific figures - confirm Kentucky's current estate/inheritance tax thresholds and rates with the state tax authority and your CPA or estate attorney.
Plan your gifting while assets are smaller.
Family Matters tracks every gift against the exclusion and your lifetime exemption, so you can move growth out of a taxable estate deliberately. Try it free for 45 days.
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