Taxes are often a concern among those in the process of estate planning. Nobody wants to burden their loved ones with taxes after their death; similarly, people often worry about their estate being greatly reduced by taxes. Luckily, Missouri is a tax-friendly state for estate planners. Read more to learn more about estate taxes, inheritance taxes, and other taxes to consider when planning your estate in Missouri.
What is an Estate Tax?
An estate tax is a tax on a person’s total assets at the time of death. The value of assets is calculated based on the current fair market value. Depending on the location, an estate may be subject to state and federal estate taxes; however, most estates valued less than $1 million aren’t subject to an estate tax.
Does Missouri Have an Estate Tax?
As of 2005, there is no tax imposed on estates in Missouri. Additionally, you may be subject to the federal estate tax, which only applies to estates totaling over $13.61 million in 2024, with an increase to $13.99 million in 2025. Federal estate taxes are only imposed on any inheritance that exceeds the threshold instead of the value of the entire estate. Tax rates vary based on the total value of the estate, but typically fall between 18-40%.
Inheritance Taxes in Missouri
Although the two are often used interchangeably, inheritance taxes are very different from estate taxes. Inheritance tax isn’t imposed on the state itself, but on each individual who receives an inheritance. However, there is no inheritance tax in Missouri. Only a handful of states have an inheritance tax, so if you receive an inheritance from someone who dies in one of those states, you may be required to pay an inheritance tax to that state. States with an inheritance tax include Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Tax rates vary from state to state and may depend on the amount of the inheritance. If you receive an inheritance from someone who resided in one of those six states, you should consult with an estate planning attorney to help you understand your tax obligations.
Reducing Your Estate’s Taxes
There are different methods in estate planning if you wish to reduce your estate tax burden should it be subject to federal taxes. If you’re hoping to lower the value of your estate, talk to an estate planning expert about which method may be best for you. Some of the most popular methods of avoiding estate taxes include:
- Gifts – You can give unlimited individuals up to $18,000 per year with no gift tax.
- Donations – Charitable giving is exempt from estate taxes and can reduce your estate’s total value.
- Trusts – Creating trusts reduces the value of your estate while allowing you to determine how you want those assets to be used.
Discuss Your Estate Plan with an Attorney Estate Planning Attorney
Creating an estate plan is essential for every Missouri resident, regardless of whether estate or inheritance taxes are a concern. Contact Mark Harford Law to begin the process, make changes to your current plan, or discuss your tax concerns with a member of our law team.