In Ohio, you can inherit any amount of money without paying state inheritance or estate tax, because Ohio has neither. At the federal level, an estate has to exceed $15 million in 2026 before any estate tax is owed, and even then the estate itself pays the bill, not you. For almost every Ohio beneficiary, the transfer itself is tax-free. The taxes that can still catch you come later, on income the inherited assets produce and on withdrawals from inherited retirement accounts.
Ohio Charges Nothing on What You Inherit
Ohio repealed its estate tax for anyone dying on or after January 1, 2013, through House Bill 153 of the 129th General Assembly.1Ohio Department of Taxation. Estate Tax Update The separate Ohio inheritance tax was already gone, having been repealed in 1968.2Ohio Department of Taxation. 2013 Brief Summary – Estate Tax
That means the size of your inheritance from an Ohio decedent does not matter for state tax purposes. Neither does your relationship to the person who died. A spouse, a child, a friend, a neighbor: the state treats them the same, and the state tax is zero.
Some other states still tax inheritances at much lower thresholds, and beneficiaries in Pennsylvania, Kentucky, and New Jersey can owe state-level tax on modest amounts. Ohio is not among them.
The Federal Threshold Is $15 Million
The only transfer tax that could touch an Ohio inheritance is the federal estate tax, and it applies to a tiny fraction of estates. For deaths in 2026, the exemption is $15 million per person.3Internal Revenue Service. What’s New – Estate and Gift Tax Estates worth less than that owe no federal estate tax at all.
The $15 million figure comes from the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, which amended the basic exclusion amount for 2026.3Internal Revenue Service. What’s New – Estate and Gift Tax The number adjusts for inflation in later years.
Married couples effectively double the shelter. Portability lets a surviving spouse add the deceased spouse’s unused exemption to their own, bringing the combined amount to as much as $30 million in 2026.4Internal Revenue Service. Frequently Asked Questions on Estate Taxes Portability requires the first spouse’s estate to file Form 706, even if it owes nothing, so it is worth raising with the executor rather than assuming it happens on its own.
When an estate does exceed the exemption, the portion above $15 million is taxed at graduated rates topping out at 40%.5Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax The estate pays that tax before distributing anything. You, as a beneficiary, do not write a check to the IRS for estate tax. Fewer than 1% of estates nationwide owe any.
The Step-Up in Basis Protects You From Old Gains
One rule quietly does more work than any exemption for ordinary heirs: the step-up in basis. When you inherit an asset, your tax basis resets to its fair market value on the date of death.6Office of the Law Revision Counsel. 26 US Code 1014 – Basis of Property Acquired From a Decedent Everything the original owner’s asset gained during their lifetime is wiped from your tax calculation.
Say a parent bought a house in 1985 for $80,000, and it was worth $350,000 on the day they died. Your basis is $350,000. If you sell it for $360,000, your taxable capital gain is $10,000, not $270,000. The rule covers real estate, stocks, and most other inherited assets. It works in the other direction too: an asset worth less at death than at purchase steps down to the lower value, and you cannot claim a loss based on what the original owner paid.
Where Taxes Still Show Up After You Inherit
The transfer itself is tax-free, but what those assets earn or produce after the date of death is taxable to you, on both your federal and Ohio state returns.
- Interest and dividends earned after the date of death on an inherited brokerage or savings account.
- Rental income from inherited rental property, starting from the date you take ownership.
- Capital gains if you sell an inherited asset for more than its stepped-up basis. Assets held for more than a year after inheriting qualify for long-term capital gains rates.7Internal Revenue Service. Gifts and Inheritances
Ohio taxes this income on top of the federal tax. The state income tax applies to Ohio taxable income above $26,050, with a top rate of 3.125% on income over $100,000.8Ohio Department of Taxation. Annual Tax Rates Capital gains, interest, dividends, and retirement distributions are all treated the same way.
Inherited Retirement Accounts Are the Real Exception
Traditional 401(k)s and traditional IRAs are the one place a large “inheritance” produces a real tax bill for the person receiving it. These accounts were funded with pre-tax dollars, and every dollar you withdraw from an inherited traditional account is ordinary income to you, federally and in Ohio.9Internal Revenue Service. Retirement Topics – Beneficiary
For deaths in 2020 or later, most non-spouse beneficiaries have to empty an inherited traditional retirement account by the end of the tenth year after the year of death.9Internal Revenue Service. Retirement Topics – Beneficiary Within that window, you choose the timing. Emptying a $500,000 inherited IRA in a single year can push you into a much higher federal bracket and into Ohio’s top rate; spreading withdrawals across the full ten years can keep the effective tax bill meaningfully lower.
A narrower group, called eligible designated beneficiaries, can stretch distributions over their own life expectancy instead of using the 10-year rule:
- Surviving spouses, who can also roll the account into their own IRA and treat it as their own.
- Minor children, who can stretch distributions until they reach the age of majority, at which point the 10-year clock starts.
- Disabled or chronically ill individuals.
- Anyone no more than 10 years younger than the deceased account holder.
Inherited Roth Accounts
Inherited Roth IRAs and Roth 401(k)s are more generous. Contributions come out tax-free, and earnings are also tax-free as long as the Roth was open for at least five years before the original owner’s death.9Internal Revenue Service. Retirement Topics – Beneficiary If the account was younger than five years, the earnings portion may be taxable, but the contributions still come out tax-free.
What You Actually Have to File
As a beneficiary, your filing life stays simple. Report taxable income from inherited assets on your regular federal and Ohio returns. Distributions from an inherited retirement account arrive with a 1099-R from the plan administrator. Sales of inherited property go on Schedule D. There are no special estate forms for you to file.
The executor’s filing obligations are separate. Form 706 is only required when the gross estate plus lifetime taxable gifts exceeds the $15 million threshold, in which case it is due nine months after the date of death, with an automatic six-month extension available.10eCFR. 26 CFR 20.6075-1 – Returns; Time for Filing Estate Tax Return For a surviving spouse who wants to preserve portability, Form 706 has to be filed even when the estate owes nothing, and that is a conversation to have with the executor early.