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Is Inheritance Taxable In California?

Updated: Nov 28, 2022

What Is Inheritance Tax, And Does It Apply In California?

There is no inheritance tax in California. Many state inheritance taxes were phased out when the federal government enacted the Economic Growth and Tax Relief Reconciliation Act—California was one of them.

Furthermore, a majority of the state's residents must approve new legislation in California. As a result, since 2005, California has had no inheritance tax regulations.

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However, federal income tax legislation continues to apply, even though, as previously indicated, California did not have a state income tax in 2019. In addition, the California legislature recently attempted to pass legislation that would have reinstated the California estate tax. Instead, it imposed a new gift and generation-skipping tax on California residents beginning January 1, 2021.

What's The Difference Between Inheritance Tax And Estate Tax?

Many people confuse an estate tax with an inheritance tax since the two are seemingly the same. However, the most crucial distinction between the two taxes is who pays the tax:

  • When an estate tax is applied, the person who owns the estate is the one who pays the tax.

  • On the other hand, the person who inherits the property is responsible for paying the tax in an inheritance tax.

So, to summarize, an estate owner is in charge of paying the estate tax, while the person inheriting is in order of paying the inheritance tax.

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There is another distinction between an inheritance tax and an estate tax. Both determine the fair market worth of a deceased person's property as the date of death, usually the day of death. However, here's how they differ:

  • An estate tax is levied on the estate before its assets are distributed.

  • An inheritance tax is charged on beneficiaries as they receive assets.

If you need someone to address your concerns about estate and inheritance, contact a California Estate Attorney to help you. A lawyer can answer essential questions, help you file the proper documents, and protect your rights.

Do You Need To Pay Upon Claiming Your Inheritance?

An estate tax is based on the total value of a deceased person's money and property. It is deducted from the decedent's assets before any transfer to beneficiaries.

As previously stated, the estate tax is a federal tax imposed on transferring an estate's assets before they are distributed. Only estates valued at more than $11.58 million are subject to the federal estate tax.

An inheritance tax is a tax that is levied on an asset that you receive as a gift. The estate will pay any debts owed by the estate before any inherited assets are distributed.

On the other hand, on the federal level, the portion of an estate over $11.4 million is subject to a 40% federal estate tax. One of the advantages of an estate tax is that it is collected before the legacy is distributed, so you will not have to worry about it. The value of the assets you receive from someone's estate is used to calculate the inheritance tax, which means that you, the person inheriting, would be liable for paying it if it applied.

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While inheritance is not taxable in California, estate taxes are still under federal law. However, estate taxes are paid before the estate is distributed as an inheritance.

So if you're a beneficiary, you don't have to worry about taxes. However, if you are the one who owns the estate, you still have to pay taxes before transferring assets.

Need someone to manage your inheritance? is a Free Lawyer Referral Service that helps connect you with a California Estate Lawyer best fit to handle your legal concerns.

Contact us through our submission form or 24/7 live chat for a free case review.


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