There is no New York inheritance tax. If you receive money, a house, retirement accounts, or any other assets from someone who died, New York will not tax you for receiving them. What New York does have is an estate tax, paid by the deceased person’s estate before anything is distributed, and that tax can reduce the pool of assets that eventually reaches you.
Why You Don’t Pay, but the Estate Might
An inheritance tax is charged to the person receiving assets. An estate tax is charged to the estate itself and paid out of the deceased person’s assets before beneficiaries get their shares. New York only imposes the second kind. As a beneficiary, you never write a check to New York for receiving an inheritance. The executor handles any estate tax from estate funds, which can shrink what is left to distribute.
Only six states currently impose an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. New York is not one of them.
When an Out-of-State Death Can Still Reach You
Living in New York does not automatically shield you from another state’s inheritance tax. If you inherit from someone who lived in one of the six inheritance-tax states, or who owned property there, that state can tax your share depending on your relationship to the deceased person. New Jersey, for example, can tax inheritances received by beneficiaries who are not close relatives, even if the beneficiary lives in New York.
The question to ask when you’re named in a will or trust from out of state is where the deceased person was domiciled and where the assets are located, not where you live.
How New York’s Estate Tax Can Reduce Your Inheritance
Because the estate tax comes off the top, it matters to you even though you don’t owe it directly. New York’s estate tax is levied on the total value of the deceased person’s estate under Tax Law Article 26.1New York State Senate. New York Tax Law Article 26 – Estate Tax The taxable estate generally includes real estate, vehicles, bank accounts, stocks, bonds, mutual funds, certain life insurance proceeds, jointly held property, and some property transferred during life where the deceased kept control or benefit.
The Basic Exclusion Amount
New York’s estate tax only applies when the estate exceeds the basic exclusion amount, which adjusts each year for inflation.2New York State Senate. New York Tax Law TAX Section 952 For deaths in 2025, the basic exclusion is $7,160,000.3Department of Taxation and Finance. Estate Tax Estates below that figure owe no New York estate tax, and every dollar in the estate flows through to beneficiaries after debts and expenses.
The Cliff
New York’s estate tax has an unusual feature that most other states don’t. If the estate’s value exceeds 105% of the basic exclusion amount, the exemption disappears entirely and the whole estate is taxed starting from the first dollar.2New York State Senate. New York Tax Law TAX Section 952 Using the 2025 threshold, 105% of $7,160,000 is roughly $7,518,000. An estate worth $7,150,000 owes nothing. An estate worth $7,520,000 owes tax on the entire amount. Between 100% and 105% of the exclusion, the credit phases down rapidly, so an estate slightly above the exemption can face a disproportionately large tax bill compared with one just below it.
The practical takeaway for a beneficiary is that if the estate you’re inheriting from sits close to $7 million, the amount that reaches you can vary sharply depending on how the final valuation lands.
Rates
When the estate does owe tax, New York applies a progressive rate structure that ranges from 3.06% on the lowest taxable amounts up to 16% on estate values above roughly $10.1 million. The exact schedule is set by the tax computation table tied to the date of death.3Department of Taxation and Finance. Estate Tax
Gifts Made in the Last Three Years
Large gifts made shortly before death do not shrink the taxable estate the way people sometimes assume. New York requires taxable gifts made during the three years before death to be added back to the estate’s value for tax purposes, unless the gift was already included in the federal gross estate.4New York State Senate. New York Tax Law TAX Section 954 Gifts made before April 1, 2014, gifts made while the giver was a nonresident, and gifts of real estate or tangible personal property located outside New York are not added back. The add-back can push an estate over the exclusion or across the 105% cliff.3Department of Taxation and Finance. Estate Tax
The Tax That Can Actually Reach You: Capital Gains When You Sell
The one tax situation you should plan for as a beneficiary is federal capital gains when you sell what you inherit. The news here is mostly good. Under Internal Revenue Code Section 1014, most inherited property receives a “stepped-up” basis equal to its fair market value on the date of the owner’s death.5Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
If your parent bought a house for $200,000 and it was worth $800,000 the day they died, your basis is $800,000. Sell it for $810,000 and you owe capital gains tax only on the $10,000 gain, not on the $610,000 of appreciation that built up during their lifetime. Inherited property is also treated automatically as held long-term for capital gains purposes, no matter how quickly you sell.
Not everything steps up. Funds in traditional IRAs, 401(k)s, and other tax-deferred retirement accounts keep their original tax treatment, and distributions to you as beneficiary are generally taxable as ordinary income. The stepped-up basis is one of the most valuable tax benefits available to heirs and should factor into any decision about whether to sell an inherited asset now or hold it.
What to Ask the Executor
Since New York has no inheritance tax, your tax exposure as a beneficiary comes down to two questions the executor can answer. First, does the estate owe New York estate tax, and if so, is it near the 105% cliff? That tells you whether the estate itself will shrink before distribution. Second, what is the date-of-death fair market value of any assets you’re receiving? That number becomes your basis for calculating capital gains whenever you sell.