Family · Inheritance tax
Does California Have an Inheritance Tax?
Whether California taxes what an heir inherits, who has to pay, the rates by relationship, and who is exempt. Inheritance tax is separate from any estate tax. Cited to the statute.
How the inheritance tax works in California
Who pays, how the rate tracks the relationship to the person who died, and the heirs the law exempts.
| How the tax works | What it means |
|---|---|
| No inheritance tax to pay | California does not tax an heir on an inheritance. There is no relationship-based tax the way Pennsylvania, New Jersey, Kentucky, Maryland, and Nebraska have. The honest answer is not that a statute permits inheriting tax-free, it is that no statute imposes an inheritance tax. |
| Repealed and barred by voters | The former Inheritance Tax Law, Part 8 of Division 2 of the Revenue and Taxation Code, was repealed by Proposition 6 in June 1982. The measure also prohibited the state and local governments from imposing an inheritance tax in the future. |
| No state estate tax either | California also has no state estate tax. The temporary pick-up estate tax that briefly replaced the inheritance tax became inoperative for deaths on or after January 1, 2005. |
| Who is exempt | What it means |
|---|---|
| Federal estate tax still applies to large estates | California has no death tax of its own, but the federal estate tax can still reach a very large estate. That tax is paid by the estate, not the heir, and only estates worth many millions of dollars owe it. |
| Income tax on inherited assets | Inheriting property is not taxed, but income the assets later produce, such as rent, dividends, or gain when you sell, can be taxable. That is ordinary income or capital gains tax, not an inheritance tax. |
| Inheriting from another state | If you inherit from someone who lived in a state that does levy an inheritance tax, that state’s tax can apply to the property there. California’s lack of a tax does not shield an inheritance governed by another state’s law. |
What you can do right now
Concrete, neutral steps if you may owe or receive an inheritance in California. This is general information, not tax or legal advice.
- Confirm there is no state tax to file
California has no inheritance tax and no state estate tax, so there is no state death-tax return for an heir to file on a California estate.
- Check whether the estate is large enough for federal tax
Only very large estates owe federal estate tax, and the estate pays it, not the heir. Most estates fall well under the federal exemption.
- Watch for out-of-state inheritance tax
If the person who died lived in or owned property in an inheritance-tax state, that state’s tax may apply. Check the law where the property and the decedent were located.
- Plan for income and property taxes, not inheritance tax
What you inherit is not taxed, but later income or a sale can be. Ask a tax professional about basis, capital gains, and any property-tax reassessment before selling.
Inheritance tax turns on the exact relationship and the value received. The state department of revenue publishes the forms and can point you to the current rate schedule.
→ California Franchise Tax BoardThis is general information, not tax or legal advice. Rates and exemptions change and turn on the relationship, so confirm your situation against the statute or with the state revenue office.
What people in California get wrong about inheritance tax
California has no inheritance tax, and the reason is a clear piece of history rather than a gap in the law. The state once had an Inheritance Tax Law in Part 8 of Division 2 of the Revenue and Taxation Code, but voters repealed it, along with the gift tax, through Proposition 6 in June 1982. That measure went further and barred the state and local governments from imposing an inheritance tax at all. So an heir in California owes no state tax on what they inherit, whether spouse, child, cousin, or friend. California also has no state estate tax: the temporary pick-up tax that briefly replaced the old inheritance tax ended for deaths in 2005. The only death tax that can still touch a California estate is the federal estate tax, which the estate pays and which reaches only very large estates. Keep the two ideas separate. An inheritance tax is paid by the heir; an estate tax is paid by the estate. California has neither.
Common questions
Does California have an inheritance tax?
No. California has no inheritance tax. Voters repealed it in 1982 through Proposition 6 and barred the state from imposing one, so an heir owes no state tax on an inheritance.
Do I have to pay tax on money I inherit in California?
Not to California. There is no state inheritance tax and no state estate tax. Income the inherited assets later earn, or gain when you sell, can be taxable, but the inheritance itself is not.
Does California have an estate tax?
No. California has no state estate tax. The temporary pick-up estate tax ended for deaths on or after January 1, 2005. Only the federal estate tax, on very large estates, can apply.
Is there a federal inheritance tax?
No. There is no federal inheritance tax. The federal government levies an estate tax, paid by the estate, and only very large estates owe it.
What if I inherit from someone in another state?
If the person who died lived in or owned property in a state with an inheritance tax, that state’s tax can apply. California having no tax does not remove another state’s tax on property governed by its law.
Not legal advicePlainStatute provides plain-language summaries of public law for general information only. This is not legal advice. Statutes change; always confirm current requirements with the official source linked above before acting.