There is no inheritance tax in Georgia, and there is no state estate tax either. If you inherit money or property from someone who lived in Georgia, you owe the state nothing on that transfer. The taxes you may still have to think about are all federal: an estate tax that applies only to estates above $15 million, income tax on inherited retirement accounts, and capital gains tax if you later sell inherited property for more than it was worth on the date of death.
Why Georgia Heirs Owe No State Tax
Georgia collected an estate tax years ago that piggybacked on a federal credit for state death taxes. When that credit was phased out between 2002 and 2005, Georgia’s tax went with it. The legislature made the repeal explicit in O.C.G.A. § 48-12-1, which declares that no estate taxes shall be levied and no estate tax returns shall be required by the state.1Department of Revenue. Estate Tax – FAQ
People use “inheritance tax” and “estate tax” interchangeably, but they are different taxes. An estate tax is paid by the estate before assets are distributed. An inheritance tax is paid by the heir on what they receive. Georgia imposes neither. Only five states still collect an inheritance tax: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. None of those taxes reach an inheritance from a Georgia decedent.
Federal Estate Tax on Estates Above $15 Million
The federal estate tax is the only tax that can reduce a Georgia inheritance before it reaches heirs, and the threshold is high. For deaths in 2026, the basic exclusion amount is $15,000,000 per person, set by the One, Big, Beautiful Bill Act signed into law on July 4, 2025.2Internal Revenue Service. What’s New — Estate and Gift Tax The top federal rate on amounts above the exemption reaches 40 percent.3Office of the Law Revision Counsel. 26 USC 2001 Imposition and Rate of Tax
The estate pays this tax before assets are distributed, so heirs never receive a bill from the IRS. It still reduces what they eventually get, and in an estate that is asset-rich but cash-poor, the executor may have to sell property to cover it. The taxable estate includes real estate, bank accounts, investments, business interests, and life insurance proceeds payable to the estate or over which the decedent held incidents of ownership.
Married couples can shield up to $30 million by combining exemptions through a mechanism called portability. When the first spouse dies, the executor files Form 706 to transfer the unused exclusion to the surviving spouse. The election has to be made on a timely filed return, even if the estate is otherwise too small to require one.4Internal Revenue Service. Instructions for Form 706 – Section: Part VI — Portability of Deceased Spousal Unused Exclusion
Two deductions frequently wipe out estate tax on estates that look large on paper. The unlimited marital deduction lets any amount pass to a surviving spouse who is a U.S. citizen without triggering estate tax; there is no cap.5Internal Revenue Service. Frequently Asked Questions on Estate Taxes for Nonresidents Not Citizens of the United States – Section: What Deductions Are Available The charitable deduction is unlimited too, so assets left to qualifying charities do not count toward the taxable estate. If the surviving spouse is not a U.S. citizen, the marital deduction is only available through a Qualified Domestic Trust set up at the time of the first spouse’s death.
Stepped-Up Basis on Inherited Property
For almost every Georgia heir, the most valuable federal tax rule is the stepped-up basis. When you inherit property, your cost basis in it resets to the fair market value on the date of the decedent’s death rather than what the decedent originally paid.6Office of the Law Revision Counsel. 26 USC 1014 Basis of Property Acquired From a Decedent
The practical effect is large. Say your parent bought a home in Atlanta in 1990 for $120,000 and it was worth $550,000 the day they died. If you sell it soon after for $550,000, your taxable gain is essentially zero, because your basis is $550,000. Without the step-up, you would owe capital gains tax on $430,000 of appreciation. The same rule applies to inherited stocks, brokerage accounts, and any other appreciated asset.7Internal Revenue Service. Gifts and Inheritances
The executor can instead elect an alternate valuation date six months after death if that would reduce overall estate tax, but that election requires filing Form 706. If you plan to sell inherited property, pay for a date-of-death appraisal. It fixes your basis on the record and protects you if the IRS questions the number later.
Income Tax on Inherited Retirement Accounts
Inherited 401(k)s and traditional IRAs are where Georgia heirs most often get hit with a tax bill they didn’t expect. These accounts usually escape estate tax, but withdrawals are taxed as ordinary income, and federal rules now force most non-spouse beneficiaries to empty an inherited account within 10 years of the account holder’s death.8Internal Revenue Service. Retirement Topics – Beneficiary
The 10-year rule, introduced by the SECURE Act for account owners who died in 2020 or later, applies to adult children, siblings, friends, and most other individual beneficiaries. The full balance has to come out by the end of the tenth year following the year of death, and every dollar is taxable income in the year you withdraw it. A large inherited IRA cashed out in a single year can push you into a much higher bracket.
A narrower group of beneficiaries can stretch distributions over their own life expectancy instead:
- Surviving spouses
- Minor children of the account holder, until they reach the age of majority, when the 10-year clock starts
- Disabled or chronically ill individuals
- Beneficiaries no more than 10 years younger than the deceased account holder
Inherited Roth IRAs follow the same 10-year timeline for non-spouse beneficiaries, but qualified withdrawals come out tax-free because the original owner already paid income tax on the contributions. If you inherit both traditional and Roth accounts and can choose which to draw from first, the difference in tax treatment matters.
Year’s Support for Surviving Spouses and Minor Children
Georgia gives a surviving spouse and minor children a protection many families miss. Under O.C.G.A. § 53-3-1, they can petition the probate court for a Year’s Support award that sets aside estate property for 12 months of support after the death.9Justia Law. Georgia Code 53-3-1 – Preference and Entitlement
The power of Year’s Support is its priority. The statute places it ahead of nearly all other claims against the estate, including unsecured creditors like credit card companies. In an insolvent estate, a Year’s Support award can transfer the family home and other property to the surviving spouse before creditors are paid. Secured debts like mortgages still attach to the underlying property, but for a family facing an estate swamped by unsecured debt the benefit is substantial.
The petition has to be filed within two years of the date of death. A surviving spouse who remarries before filing loses eligibility. There is no fixed dollar amount; the probate court decides what is reasonable for 12 months of support given the family’s circumstances and the estate’s size.
When the Estate Crosses State Lines
Georgia’s no-inheritance-tax rule protects heirs from state-level tax on assets received from a Georgia decedent. It does not protect them from other jurisdictions.
If the Decedent Lived in a State That Taxes Inheritances
If the person who died was domiciled in Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, that state’s inheritance tax can apply even though you live in Georgia. The obligation follows the decedent’s domicile and the location of the property, not the heir’s residence. Rates and exemptions vary widely. Kentucky and New Jersey exempt close family members entirely; Pennsylvania taxes transfers from parents to children at a reduced rate.
Georgia Real Estate Owned by an Out-of-State Decedent
When a person who lived outside Georgia owned real property in the state, the will usually has to go through ancillary probate in a Georgia court in addition to the primary probate in the home state. The process requires a certified copy of the will and authenticated copies of the probate proceedings from the home jurisdiction.10Justia Law. Georgia Code 53-5-33 – Requisites for Admission to Ancillary Probate Heirs who plan to sell the property need ancillary probate completed before clean title can transfer.
Foreign Heirs and Foreign Decedents
Nonresident aliens face a very different federal estate tax picture. The exemption is only $60,000, not $15 million, so a nonresident alien who dies owning U.S. real estate or U.S. securities worth more than $60,000 can face federal estate tax on the excess.11Internal Revenue Service. Frequently Asked Questions on Estate Taxes for Nonresidents Not Citizens of the United States U.S. persons who receive bequests totaling more than $100,000 from a nonresident alien or foreign estate in a tax year must report those amounts on IRS Form 3520.12Internal Revenue Service. About Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts
Deadlines and Penalties if Form 706 Is Required
If the gross estate exceeds $15 million in 2026, or if the executor is electing portability, IRS Form 706 has to be filed within nine months of the date of death.13Internal Revenue Service. Instructions for Form 706 An automatic six-month extension is available by filing Form 4768 before the original deadline. The extension buys time to file, not time to pay; interest starts running on unpaid tax from the original nine-month due date.
Missing the filing deadline triggers a failure-to-file penalty of 5 percent of the unpaid tax for each month the return is late, capped at 25 percent.14Internal Revenue Service. Failure to File Penalty A separate failure-to-pay penalty runs at 0.5 percent per month, also capped at 25 percent; when both apply in the same month, the failure-to-file penalty is reduced so the combined rate is 5 percent rather than 5.5 percent.15Internal Revenue Service. Failure to Pay Penalty Interest on unpaid estate tax compounds daily at the federal short-term rate plus three percentage points.16Office of the Law Revision Counsel. 26 USC 6621 Determination of Rate of Interest In fraud cases, the IRS can add a civil fraud penalty equal to 75 percent of the underpayment attributable to fraud, and the taxpayer bears the burden of showing which portion was not fraudulent.17Office of the Law Revision Counsel. 26 USC 6663 Imposition of Fraud Penalty
The executor carries personal risk here. Under federal law, an executor who distributes assets to heirs before the estate’s tax obligations are satisfied can be held personally liable for the unpaid tax, up to the value of what was distributed. For any estate approaching the filing threshold, that exposure is the reason to bring in a tax professional early rather than late.