Virginia does not impose an estate tax or a general inheritance tax. The Commonwealth repealed its estate tax for deaths occurring on or after July 1, 2007, and it has never had a standalone gift tax.1Virginia Department of Taxation. Estate and Inheritance Taxes A Virginia estate can still owe a small probate tax, a fiduciary income tax on income the estate earns after death, and the federal estate tax if the estate is very large.
One narrow carve-out survives the repeal. Virginia still imposes an inheritance tax on certain remainder interests, meaning the right to receive property after a prior interest ends, such as trust assets or a home passing to you after the death of a life-estate holder. When that remainder vests, the old inheritance tax can apply based on your relationship to the original decedent.2Virginia Department of Taxation. Rulings of the Tax Commissioner 99-247 This mostly affects estate plans written decades ago. If you are the beneficiary of a life estate or long-standing trust that predates 2007, flag it for a tax professional. Otherwise, the inheritance-tax question in Virginia is settled: there is no tax.1Virginia Department of Taxation. Estate and Inheritance Taxes
The Probate Tax Most Estates Actually Pay
Virginia charges a probate tax whenever a will is admitted to probate or an estate is opened for administration. The rate is 10 cents per $100 of the estate’s value, and it kicks in once the estate exceeds $15,000. An estate valued at $15,000 or less owes nothing.3Virginia Department of Taxation. Probate Tax
Cities and counties may add their own probate tax equal to up to one-third of the state amount.4Virginia Code Commission. Virginia Code 58.1-1718 – City or County Probate Tax So the total depends on where the estate is administered. At the combined maximum, a $500,000 estate would owe roughly $667. Modest, compared to the other costs of settling an estate.
What Escapes the Probate Tax
The probate tax only reaches assets that actually pass through probate. Several common asset types are exempt:
- Jointly held property with right of survivorship, which passes directly to the surviving co-owner.
- Life insurance proceeds payable to a named beneficiary other than the estate.
- Payable-on-death bonds paid to a named beneficiary.
- Property passing by power of appointment.
Retirement accounts, payable-on-death bank accounts, and assets held in a trust also bypass probate and avoid this tax.3Virginia Department of Taxation. Probate Tax Structuring ownership around these tools can reduce the probate tax to something trivial or eliminate it entirely.
Fiduciary Income Tax on Income the Estate Earns
An estate keeps generating income after the death: interest, dividends, rent, capital gains. That income is taxable to the estate itself. If the estate has to file a federal fiduciary income tax return (Form 1041), or has any Virginia taxable income, the personal representative must also file Virginia Form 770.5Virginia Department of Taxation. Fiduciary Income Tax For calendar-year estates, Form 770 is due by May 1 of the following year.6Virginia Department of Taxation. 2025 Form 770 Instructions
Estates expecting to owe $150 or more in Virginia income tax for the year may need to make quarterly estimated payments. An estate is generally exempt from estimated payments during the first two years after the date of death.5Virginia Department of Taxation. Fiduciary Income Tax
The Small Estate Shortcut
Not every Virginia estate needs formal probate. If the total value of the decedent’s personal probate estate is $75,000 or less, heirs can collect assets using a small estate affidavit instead of opening a probate case.7Virginia Code Commission. Code of Virginia Article 1 – Virginia Small Estate Act The affidavit must be signed by all known successors, at least 60 days must have passed since the death, and no one can have applied to serve as personal representative in any jurisdiction.8Virginia Code Commission. Code of Virginia 64.2-601 – Payment or Delivery of Small Asset by Affidavit
Once presented to a bank, brokerage, or other institution, the affidavit compels release of the assets to the designated successor, who then has a fiduciary duty to distribute them properly. This route avoids court involvement, legal fees, and the probate tax altogether.
Federal Estate Tax Still Applies
The federal estate tax reaches large estates regardless of state. For 2026, the basic exclusion amount is $15 million per individual, and only the value above that threshold gets taxed, at a top marginal rate of 40%.9Internal Revenue Service. What’s New — Estate and Gift Tax The estate pays this tax before any assets reach the heirs. A married couple using both exemptions can shield up to $30 million.
Portability for Married Couples
If the first spouse to die does not use their full $15 million exemption, the surviving spouse can inherit the leftover amount. This is called portability of the deceased spousal unused exclusion. It is not automatic. The executor of the first spouse’s estate has to file a federal estate tax return (Form 706) and elect portability on that return, even if the estate is small enough that no tax is owed.10Internal Revenue Service. Instructions for Form 706 (09/2025)
The return is due within nine months of death, with a six-month extension available. If the executor misses that window, a late portability election can still be made within five years of the death under a simplified IRS procedure.10Internal Revenue Service. Instructions for Form 706 (09/2025) After five years, relief becomes much harder. For any married couple whose combined estate could eventually approach the exemption, filing Form 706 at the first death is cheap insurance.
Gift Tax
Virginia has no gift tax. Federally, you can give up to $19,000 per recipient per year in 2026 without filing a gift tax return or eating into your lifetime exemption.9Internal Revenue Service. What’s New — Estate and Gift Tax The lifetime gift tax exemption is unified with the estate tax exemption at $15 million, so every dollar of lifetime gifts above the annual exclusion reduces the estate tax exemption dollar for dollar.11Office of the Law Revision Counsel. 26 U.S. Code 2010 – Unified Credit Against Estate Tax
Out-of-State Property Can Trigger Another State’s Tax
Virginia’s lack of a death tax does not shield property located elsewhere. Real estate is governed by the law of the state where it sits. A Virginia resident who owns a vacation home in a state with its own estate or inheritance tax can leave heirs a tax bill from that state. Maryland and the District of Columbia both impose estate taxes with exemptions well below the federal level, and Pennsylvania levies an inheritance tax with no exemption at all for most beneficiaries.
Out-of-state real estate may also require ancillary probate, a separate court proceeding in the state where the property sits, which adds legal fees, court costs, and delay on top of the Virginia proceedings. Holding the property in a revocable living trust, titling it as joint tenants with right of survivorship, or using a transfer-on-death deed where the other state allows one can prevent that second probate.
Planning Tools Worth Using in Virginia
No state estate tax does not mean no planning. The probate tax, ancillary probate, delays, and family friction all respond to a few basic tools.
A will is the foundation. It names beneficiaries, appoints a personal representative, and designates guardians for minor children. Without one, Virginia’s intestacy laws divide your property by statute, which may not match what you would have chosen.
A revocable living trust lets you manage assets during your lifetime and pass them to beneficiaries outside probate. No probate tax, no public filing, faster access for heirs. The trade-off is the upfront cost and the discipline of retitling assets into the trust. For real estate specifically, Virginia authorizes transfer-on-death deeds, which name a beneficiary who automatically receives the property at your death without probate.12Virginia Code Commission. Code of Virginia Article 5 – Uniform Real Property Transfer on Death Act You keep full control during your lifetime and can revoke the deed at any time.
Executor compensation in Virginia is not fixed by a statutory percentage. The commissioner of accounts reviews the executor’s fee for reasonableness based on the work involved.13Virginia Code Commission. Code of Virginia 64.2-1208 – Expenses and Commissions Allowed Fiduciaries If you are naming an executor, talk about compensation expectations while writing the will, not after the death. Banks and trust companies typically charge from a published fee schedule that the commissioner will generally honor unless it is clearly excessive compared to peer institutions.