New York has its own estate tax, separate from the federal one, and it starts far lower: $7.35 million for deaths in 2026, against a federal exclusion of $15 million.
Most families who owe estate tax in New York owe it only to New York.
How the New York estate tax works
New York computes a tax on the entire taxable estate from a rate table, then subtracts a credit.
Below the exclusion, the credit cancels the tax completely. Above the exclusion, the credit shrinks fast, and past 105% of the exclusion it’s gone.
- There’s no portability. A surviving spouse can’t use the unused exclusion of the spouse who died first.
- Taxable gifts made within three years of death are added back to the estate.
- The return (Form ET-706) and the tax are due nine months after death. Extensions to file are available; interest runs on late payment.
- New York has no separate gift tax and no inheritance tax on heirs.
- Tax as a share of the estate
- 9.6%
- Over the $7.35M exclusion by
- $450,000
- Federal estate tax, rough
- $0
The cliff, in plain numbers
In the narrow band between 100% and 105% of the exclusion, each extra dollar of estate can cost more than a dollar of tax.
That’s because each dollar adds tax and also takes away part of the credit. By the top of the band, the credit is zero.
That’s why the planning question is so specific. An estate a little over the line can owe hundreds of thousands of dollars that an estate a little under it doesn’t.
Worked examples for 2026 deaths
| New York taxable estate | New York estate tax | Share of the estate |
|---|---|---|
| $7,000,000 | $0 | 0% |
| $7,350,000 | $0 | 0% |
| $7,450,000 | $265,600 | 3.6% |
| $7,550,000 | $497,200 | 6.6% |
| $7,800,000 | $746,000 | 9.6% |
| $8,500,000 | $844,400 | 9.9% |
| $10,000,000 | $1,067,600 | 10.7% |
Figures use New York’s published rate table and the 2026 exclusion, before any credit for gift tax paid. They’re illustrations, not a computed return.
What counts in the New York taxable estate
Start with everything the person owned or controlled at death: homes, investment and retirement accounts, business interests, and life insurance they owned.
Subtract debts, funeral and administration expenses, and what passes to a spouse or to charity. Then add back taxable gifts from the last three years.
Life insurance surprises people most. A policy the person owned counts at its full death benefit, which can push an estate over the line on its own.
Ways families reduce it
- A credit shelter trust in each spouse’s plan, so the first spouse’s exclusion isn’t wasted.
- A charitable clause that gives just enough to charity to keep the estate under the exclusion, when that leaves heirs more.
- Lifetime gifts, keeping the three-year add-back in mind.
- Owning life insurance in an irrevocable trust instead of personally.
Each of these is legal work. Your estate attorney designs it; the numbers above show why it can be worth the conversation.
How Morrowgate helps. Greg builds the family balance sheet, shows where the estate sits against the exclusion and the cliff today and after a sale or other change, and coordinates the numbers with your estate attorney and CPA, who draft and advise.
Questions people ask
What is the New York estate tax exemption for 2026?
The basic exclusion amount is $7,350,000 for deaths in 2026. It rises each year with inflation.
What is the New York estate tax cliff?
If the taxable estate is more than 105% of the exclusion, $7,717,500 in 2026, the exclusion disappears and the whole estate is taxed.
Can my spouse use my unused New York exemption?
No. New York doesn’t allow portability, so each spouse’s exclusion has to be used in their own estate plan.
Do lifetime gifts avoid New York estate tax?
Gifts made more than three years before death generally aren’t added back. Taxable gifts within three years are.
When is New York estate tax due?
The return and payment are due nine months after the date of death. An extension to file is available, but interest runs on unpaid tax.
Where this guidance stops
This article is general education on the New York estate tax: how the rules and the options generally work.
It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- New York State Department of Taxation and Finance: Estate tax
- New York State Department of Taxation and Finance: TSB-M-14(6)M, estate tax changes (credit phase-out)
- NYSSCPA: Navigating the 2026 New York estate tax
- IRS: 2026 inflation adjustments (federal exclusion $15 million)