What assets are excluded from inheritance tax?

The answer depends heavily on state law, because the U.S. does not have a federal inheritance tax. In states that do have inheritance tax, common exclusions often include:

• Transfers to a surviving spouse (usually fully exempt).
• Transfers to certain close relatives (children, parents, sometimes siblings) above a generous threshold or at lower rates.
• Life insurance proceeds paid directly to a named individual beneficiary (though they may count in a taxable estate in some contexts).
• Some small inheritances under a state’s minimum filing threshold.
• Other assets, like retirement accounts, brokerage accounts, and real estate, are usually subject to the state’s inheritance‑tax rules unless a specific exemption applies. Always check the rules in the state where the decedent lived or where the property is located.

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