New York Estate Tax: Exemption, Cliff, Rates, and Filing

The New York estate tax exemption for 2026 is $7,350,000 per person.1New York State Department of Taxation and Finance. Estate Tax An estate valued at or below that figure owes no New York estate tax. Go over it, and the state’s graduated rates kick in from 3.06% up to 16%. Go more than 5% over it, and something worse happens: the exemption vanishes entirely and the full estate is taxed from the first dollar.2New York State Senate. New York Tax Law 952 – Tax Imposed

The 2026 Exemption Amount

For deaths occurring between January 1 and December 31, 2026, the basic exclusion amount is $7,350,000.1New York State Department of Taxation and Finance. Estate Tax New York adjusts the figure periodically. If the total value of the estate stays at or below the exclusion, no state estate tax is owed and, in most cases, no return is required.

The value that matters is the federal gross estate: real property, bank and investment accounts, retirement accounts, life insurance proceeds, business interests, and other assets the decedent owned at death. To that figure, add any taxable gifts made within three years of death that are not already counted in the federal gross estate.1New York State Department of Taxation and Finance. Estate Tax The three-year add-back exists to stop deathbed gifting from dropping an estate under the line.

Deductions then bring the gross figure down to the taxable estate. The unlimited marital deduction removes anything passing to a surviving spouse who is a U.S. citizen. Charitable bequests are fully deductible. Debts, mortgages, funeral costs, executor fees, attorney fees, and other administrative expenses reduce the taxable value as well.3New York State Department of Taxation and Finance. Treatment of Certain Deductions for New York State Estate Tax

The Cliff That Wipes Out the Exemption

The exemption is not a straightforward deduction. Under Tax Law § 952(c), the credit that zeros out the tax for estates at the exclusion begins phasing out the moment an estate exceeds it, and disappears entirely once the estate reaches 105% of the exclusion.2New York State Senate. New York Tax Law 952 – Tax Imposed In 2026, that cliff sits at $7,717,500.

Above the cliff, the entire estate is taxable, not just the amount over $7,350,000. An estate worth exactly $7,350,000 owes nothing. An estate worth $7,720,000 owes roughly $650,000 or more. The extra $370,000 in estate value triggers a tax bill nearly twice its size. Inside the narrow window between the exclusion and the cliff, the effective marginal rate can exceed 100%, meaning each additional dollar of estate value costs more than a dollar in tax. This is the reason estate planners in New York work so hard to keep values below the line, sometimes through charitable gifts or lifetime giving that puts the estate safely under $7,350,000.

What the Tax Costs Once You Owe It

If the exemption is lost, tax is computed on the full taxable estate using the graduated schedule in Tax Law § 952(b):2New York State Senate. New York Tax Law 952 – Tax Imposed

  • Up to $500,000: 3.06%
  • $500,001 to $1,000,000: $15,300 plus 5.0% of the amount over $500,000
  • $1,000,001 to $1,500,000: $40,300 plus 5.5% of the amount over $1,000,000
  • $1,500,001 to $2,100,000: $67,800 plus 6.5% of the amount over $1,500,000
  • $2,100,001 to $2,600,000: $106,800 plus 8.0% of the amount over $2,100,000
  • $2,600,001 to $3,100,000: $146,800 plus 8.8% of the amount over $2,600,000
  • $3,100,001 to $3,600,000: $190,800 plus 9.6% of the amount over $3,100,000
  • $3,600,001 to $4,100,000: $238,800 plus 10.4% of the amount over $3,600,000
  • $4,100,001 to $5,100,000: $290,800 plus 11.2% of the amount over $4,100,000
  • $5,100,001 to $6,100,000: $402,800 plus 12.0% of the amount over $5,100,000
  • $6,100,001 to $7,100,000: $522,800 plus 12.8% of the amount over $6,100,000
  • $7,100,001 to $8,100,000: $650,800 plus 13.6% of the amount over $7,100,000
  • $8,100,001 to $9,100,000: $786,800 plus 14.4% of the amount over $8,100,000
  • $9,100,001 to $10,100,000: $930,800 plus 15.2% of the amount over $9,100,000
  • Over $10,100,000: $1,082,800 plus 16.0% of the amount over $10,100,000

The top marginal rate of 16% applies to any taxable estate above $10,100,000.

Married Couples Can Lose an Entire Exemption

Federal law lets a surviving spouse inherit any unused portion of the deceased spouse’s exemption. New York does not offer this portability.4New York State Department of Taxation and Finance. Instructions for Form ET-706 New York State Estate Tax Return If the first spouse leaves everything to the survivor and dies, the unlimited marital deduction means no tax is owed at that point, but the first spouse’s $7,350,000 exclusion is permanently gone. When the surviving spouse later dies, only their own $7,350,000 exclusion is available.

For a couple with a combined estate of $14 million, that is the difference between owing nothing and owing tax on roughly $6.65 million. The standard workaround is a credit shelter trust, sometimes called a bypass trust. When the first spouse dies, assets up to the exclusion amount fund the trust rather than passing outright to the survivor. The surviving spouse can typically draw income from the trust and, depending on its terms, reach principal for certain needs. Because the trust owns the assets, they do not count in the survivor’s estate at death.

This structure has to be built while both spouses are alive. Couples who simply leave everything to each other through basic wills waste one full $7,350,000 exclusion at the state level. For estates anywhere near the threshold, it is the single most expensive planning oversight in New York.

If You Lived Outside New York But Owned Property Here

The exemption still matters for non-residents who owned real property or tangible personal property physically located in New York. Intangible assets like stocks, bonds, and bank accounts are generally excluded for non-residents.5New York State Senate. New York Tax Law 960 – Nonresident’s Estate Tax A non-resident who owned a Manhattan co-op and had a brokerage account in the state would be taxed on the co-op, not the brokerage account.

To determine whether tax is owed, the executor first checks whether the worldwide federal gross estate, plus any includible gifts of New York-situs property made within three years of death, exceeds the basic exclusion amount.1New York State Department of Taxation and Finance. Estate Tax If it does, the New York taxable estate is calculated using only deductions tied to property within the state, and the same rate schedule applies.3New York State Department of Taxation and Finance. Treatment of Certain Deductions for New York State Estate Tax

Filing and Paying When Tax Is Owed

When the federal gross estate plus includible gifts exceeds the exclusion, the executor must file Form ET-706 within nine months of the date of death, even if deductions ultimately eliminate the tax.4New York State Department of Taxation and Finance. Instructions for Form ET-706 New York State Estate Tax Return Any tax owed is due on the same nine-month deadline.

Form ET-133 can extend the filing deadline by up to six months. The extension does not push back the payment date.6New York State Department of Taxation and Finance. Instructions for Form ET-133 Application for Extension of Time to File and/or Pay Estate Tax The executor has to estimate the tax and pay it with the extension request. Interest on any underpayment runs at a rate that changes quarterly; for the first quarter of 2026, it is 9.5% per year, compounded daily.7New York State Department of Taxation and Finance. Interest Rates A separate late-filing penalty of 5% of the unpaid tax accrues for each month the return is overdue, capped at 25%. On a seven-figure tax bill, these numbers move fast.