An estate tax, sometimes referred to as the “death tax,” applies to the total value of assets that an individual leaves behind. Though estate taxes primarily impact larger estates, understanding how they work can be useful for anyone looking to plan ahead for their financial future.
In this post, we’ll explore the details of estate taxes, including federal regulations and whether any state-level taxes might apply to Georgia residents. By reading on, you’ll gain insight into the importance of estate tax and how preparing your estate could ease the process of transferring wealth to your loved ones or the causes you want to support.
What Is Estate Tax?
An estate tax is a tax on a person’s total assets after they pass away and before these are distributed to heirs. This tax is designed both to generate government revenue and to limit the inheritance of large estates. Unlike gift tax, which applies to living transfers, estate tax is based on assets transferred after death. Below, we’ll take a closer look at what this tax involves.
Assets Included In Your Estate
An estate tax considers the full range of possessions left by a person, assessing taxes based on the value of their combined assets. A broad range of items can count as part of an estate, from physical property to financial investments. Here’s an overview of the types of assets that are typically included:
Real estate: Property owned by the deceased—such as residential, commercial, or undeveloped land—is appraised for its current market value and contributes significantly to the estate’s taxable amount.
Personal belongings: High-value items like art, jewelry, vehicles, and collectibles are counted as part of the estate, increasing its taxable worth.
Financial accounts: Investment holdings, including stocks, bonds, and other securities, are included as assets and valued based on fair market value.
Business interests: Shares in private companies, partnerships, or other ownership stakes form part of the estate and are valued at the fair market value on the date of death.
Cash and retirement accounts: Certain retirement accounts, along with cash reserves, may also be subject to estate taxes depending on specific tax rules.
Please Note: The estate’s overall value is calculated by assessing the fair market value of each item at the time of passing. Deductions—such as unpaid debts, mortgage balances, and administrative costs related to managing the estate—are subtracted to arrive at the net estate value, which determines the taxable amount.
Does Georgia Have a State Estate Tax?
No, Georgia residents are responsible only for federal estate taxes on larger estates, unlike residents of states that still have their own estate taxes. This absence of a state estate tax can be an advantage, especially for those with substantial estates, as it reduces the tax burden on assets passed to heirs. However, many states still impose their own estate taxes.
The following states and the District of Columbia impose an estate tax:1
- Connecticut
- Hawaii
- Illinois
- Maine
- Maryland
- Massachusetts
- Minnesota
- New York
- Oregon
- Rhode Island
- Vermont
- Washington
Please Note: Although Georgia’s tax laws are currently stable, it’s always wise to stay informed about any future changes that may impact estate planning.
The Difference Between Estate Tax and Inheritance Tax
Estate tax and inheritance tax are frequently confused but apply in very different ways. Here’s a breakdown of the two:
Estate tax (tax on the estate itself): The estate tax applies to the entire value of an estate before it’s passed on to heirs. This tax is paid by the estate, reducing the amount that beneficiaries ultimately inherit, but heirs do not directly pay this tax themselves.
Inheritance tax (paid by beneficiaries): Inheritance tax is a tax paid by each individual beneficiary based on what they inherit. The tax owed by each beneficiary depends on their specific relationship to the deceased and the value of their inheritance, so each heir’s tax responsibility may differ based on these factors. Estate tax reduces the estate as a whole, while inheritance tax applies separately to each recipient.
Please Note: Georgia, like most states, has no inheritance tax. Heirs in the state are not liable for additional state taxes on their inheritance. However, inheritance taxes may need to be taken into consideration if you are inheriting assets like property in other states. States that levy their own inheritance tax include Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Iowa had an inheritance tax, but it was scheduled to be repealed at the start of 2025.2
What to Consider When Inheriting Property in Georgia
While Georgia does not impose an inheritance tax, there are still important factors for Georgia residents to consider if they are inheriting property. Key considerations include:
Coordinating with co-heirs and assessing debts: If the property has multiple heirs, having a clear plan is helpful. You and any co-heirs may need to decide together whether to keep, sell, or divide the property. Also, reviewing any outstanding debts like a mortgage is important, as these expenses may influence your options.
Financial obligations: property taxes, maintenance, mortgages, legal fees: Ownership comes with regular expenses. Property taxes must still be paid, and other costs such as maintenance, repairs, or legal fees may arise, especially during the title transfer process. If there’s still a mortgage, this will also be an ongoing cost to consider as you decide what to do with the property.
Capital gains tax and the step-up in basis for heirs: A “step-up in basis” can offer some tax relief when you inherit property. This adjustment sets the property’s taxable value to its market rate at the time of inheritance, which may reduce the capital gains tax if you sell it later.
Federal Estate Tax Thresholds and Rates
Federal estate tax exemptions set the stage for estate planning, particularly for Georgians with high-value estates. This exemption sets a threshold below which estates aren’t taxed at all, protecting a portion of wealth from federal tax. As of 2025, the federal estate tax exemption is $13.99 million for individuals and $27.98 million for married couples.3
Estates valued below these thresholds are not subject to federal estate tax. When an estate’s value surpasses these thresholds, federal estate taxes apply on a graduated scale, beginning at 18% and rising to a maximum of 40% for amounts well above the exemption.4
For those whose estates exceed the exemption amount, planning strategies, including gift tax-free transfers or placing assets in trusts, can help manage potential tax obligations. With potential changes on the horizon, Georgians with high-value estates may want to consult professionals to develop a plan that fits their needs and prepares for future tax adjustments.
Please Note: This exemption limit is currently set at a high amount, but it is scheduled to lower in 2026. In 2026, the federal estate tax exemption is set to return to its pre-TCJA amount, with adjustments for inflation. This adjustment is projected to lower the exemption to around $7 million for individuals and approximately $14 million for married couples. However, it’s possible that future legislation may change this.5
Strategies to Reduce Federal Estate Tax Liability
Reducing federal estate tax liability can help protect more of your estate’s value, allowing heirs to receive a larger share. With the right approach, a variety of strategies can limit tax exposure and support your legacy plans. By incorporating gifting, trusts, and other structured approaches, it’s possible to manage the estate’s taxable amount effectively. Here are several options to explore:
Gifting assets during your lifetime using the annual gift tax exclusion: Transferring assets to family members while still living can gradually lower the estate’s taxable amount. By using the gift tax annual exclusion each year, individuals can transfer up to a certain limit to multiple people tax-free. Over time, these gifts can make a considerable difference, shrinking the estate’s total taxable value.
Making direct payments for educational/medical expenses: Paying for someone’s healthcare costs or tuition directly is a tax-free way to reduce the estate’s size without counting toward the gift tax limit. These payments can cover substantial expenses for loved ones, and since they don’t count against the lifetime exemption, they’re a straightforward way to pass on wealth.
Using trusts, especially irrevocable trusts, to remove assets from the taxable estate: Trusts, particularly an irrevocable life insurance trust (ILIT), can help keep certain assets, like life insurance payouts, out of the taxable estate. An ILIT allows life insurance funds to go directly to beneficiaries without being counted in the estate, thereby reducing estate taxes and preserving more value for heirs.
Leveraging charitable donations to lower the estate’s taxable value: Donating part of an estate to charity can reduce its taxable portion, offering a dual benefit of tax savings and philanthropy. Assets earmarked for charity are deducted from the total estate value, minimizing tax liabilities while contributing to causes that matter to you.
Designating life insurance policies specifically for estate taxes: Setting up life insurance to cover estate tax expenses can protect the estate’s assets from being sold to pay taxes. This approach allows heirs to keep property or other valuable assets intact since the policy provides funds to cover tax obligations.
Setting up family limited partnerships (FLPs): FLPs can be a valuable option for transferring ownership of high-value assets like property or business shares to family members over time. This structure not only allows for shared ownership within the family but also helps reduce the taxable estate as assets gradually shift out of individual ownership. FLPs can be particularly effective for passing down assets that may be difficult to divide, like real estate or company shares.
Common Questions About Estate Tax in Georgia
Estate tax rules can be tricky, particularly with differences between federal guidelines and state policies. Here’s a closer look at some questions Georgia residents might have:
Is every estate in Georgia subject to tax?
Many people believe all estates are taxed, but this is a common misunderstanding. In reality, most estates fall below the federal threshold and aren’t subject to estate taxes.
Georgia does not impose its own estate tax, which simplifies planning for residents across the state. So, while those with smaller estates generally don’t face tax obligations, an estate plan can still offer peace of mind by organizing how assets are managed and distributed.
What specific federal estate tax rules apply to Georgia residents?
Georgia residents don’t face a state-level estate tax, so only federal estate tax rules apply. As of 2025, the federal exemption limit stands at $13.99 million for individuals and $27.98 million for married couples, meaning most Georgians won’t need to worry about federal estate taxes.
However, for those with larger estates, strategies such as setting up trusts, making charitable donations, and lifetime gifting can reduce the estate’s taxable portion, potentially lowering federal estate tax obligations.
Are there upcoming changes that might affect estate planning in Georgia?
Yes, significant changes may be approaching. In 2026, the federal estate tax exemption is scheduled to drop back to its pre-TCJA level, with adjustments for inflation. This adjustment may set the exemption around $7 million for individuals and about $14 million for married couples, which may bring more estates under the tax threshold.
Georgia residents with estates close to or exceeding these amounts may want to consider early gifting or irrevocable trusts to reduce potential tax liabilities. Planning ahead can help ease the tax impact on an estate when the changes take effect.
Please Note: Forthcoming legislation may prevent the federal estate tax exemption from returning to a lower threshold. This is just a reflection of the law at the time of this publication.
Planning Your Estate in Georgia: Where to Start
Estate planning can feel like a big task, but approaching it step-by-step makes it easier to manage. Starting early not only allows you to address tax concerns and protect your assets but also gives you the flexibility to adjust to future changes in tax laws or family needs. Here are some key considerations to keep in mind:
The importance of early planning and regular updates: Beginning your estate plan early gives you a head start on avoiding tax surprises. Regular updates help keep your plans current, especially when federal tax laws or family situations change, so that your plan always reflects your goals.
Practical actions for Georgia residents: Drafting a will is a straightforward first step. A will details how your property should be divided and lets you choose an executor who will carry out your instructions. Also, keeping records of your assets and any debts will simplify the process for your executor and heirs, helping to avoid confusion during an already stressful time.
Get in touch with professionals: Estate planning professionals, such as financial advisors, accountants, and attorneys, can provide insight into complex Georgia law and federal tax regulations. Their expertise can help you create a tailored estate plan that addresses both your financial objectives and the needs of your loved ones.
Secure Your Legacy in Georgia: Start Your Estate Planning Today
At our firm, we understand how important it is for Georgia residents to navigate federal estate taxes and create a plan that protects your legacy. While Georgia doesn’t have its own estate tax, federal regulations still apply and can impact the amount passed to your heirs. A thoughtful estate plan can help you address these considerations, ensuring your wishes are honored and your assets preserved.
Our team of experienced financial advisors can work closely with your tax professional or estate planning attorney, or we can connect you with trusted experts from our vetted network. By incorporating tools like trusts and marital deductions, we can help lower the taxable value of your estate, keeping more wealth in the hands of your loved ones. Additionally, our guidance can assist your executor with necessary tax filings and other important responsibilities, simplifying the process during a difficult time.
Our approach to estate planning balances effective tax strategies with your personal goals. Our goal is to offer solutions tailored to your specific needs and aligned with your family’s values. A well-structured estate plan, crafted with the help of professionals, considers tax rules, available deductions, and practical steps to secure your assets for the future.
Whether you wish to support your family, contribute to a cause, or transfer investments, we’re here to help you create a clear and comprehensive plan. Schedule a call with our team today, and let us guide you in building an estate strategy that safeguards your legacy and prepares your family for a secure future.
Sources:
- https://taxfoundation.org/data/all/state/state-estate-tax-inheritance-tax-2023/
- https://www.nerdwallet.com/article/taxes/inheritance-tax
- https://www.morganlewis.com/pubs/2024/10/irs-announces-increased-gift-and-estate-tax-exemption-amounts-for-2025#:~:text=In%20addition%2C%20the%20estate%20and,federal%20estate%20or%20gift%20tax.
- https://www.investopedia.com/estate-tax-exemption-2021-definition-5114715
- https://www.schwab.com/learn/story/countdown-gift-and-estate-tax-exemptions
