Revenue 301 inheritance 2025

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There is no federal inheritance tax. Inherited assets may be taxed for residents of Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
In California, there is no state inheritance tax.
You must report any income you receive passed through from the estate to you and reported on a Schedule K-1 (1041) on your income tax return. In addition, any property you receive from the estate will typically be considered valued at its fair market value at the date of the original owners death.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
You typically dont need to report inheritance money to the IRS because inheritances arent considered taxable income by the federal government. That said, earnings made off of the inheritance may need to be reported.
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Many people worry about the estate tax affecting the inheritance they pass along to their children, but its not a reality most people will face. In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024.

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