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  • Writer's pictureCook Tillman

Is there an estate tax or death tax in Tennessee?

As you begin planning your estate, you will need to consider not just who you trust to provide support for your loved ones and who should receive your property but also your responsibilities. Debts can have a major impact on the legacy that you leave behind when you die. Estate administration requires that your executor settle your financial obligations before handing out property to beneficiaries.

Tax obligations can also make a significant impact on what resources you can pass to the next generation. Certain taxes are unavoidable after death. Your executor will need to file a final income tax return on your behalf and pay any amount you owe. If you leave instructions to have an estate sale, your estate may need to file an income tax return and pay taxes on the funds generated.

There are also estate taxes, which some people call death taxes. This is a flat tax assessed based on the total value of someone’s property when they die. Will the estate itself be subject to taxes?

Tennessee Does Not Have An Estate Tax

The good news for those reviewing their possible estate liabilities in Tennessee is that there is no reason to worry about a state-level estate tax. T

Tennessee does not levee an estate tax. It also does not collect an inheritance tax from your beneficiaries.

However, your property could still be subject to federal estate taxes. The first $12,060,000 in estate value is exempt from taxes, but any amounts over that value are subject to federal estate taxes at the rate of 40%. The good news is that there are ways to accommodate, reduce or even eliminate such tax liability, provided you plan ahead.

Are there other taxes you need to address?

Other than income taxes and estate taxes, there are very few tax liabilities that will apply to a Tennessee estate. If you have property in other states that assess an inheritance tax, like Kentucky, there may be a state tax liability for those assets. If your loved ones sell assets after inheriting them, they may sometimes the subject to capital gains taxes.

Learning more about the various taxes that may apply to estates and inheritances can maximize the legacy that you leave behind through careful estate planning measures.

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