Do I Have to Pay Taxes on an Inheritance?

Most people who inherit money or property don't owe federal income tax on the inheritance itself — the IRS doesn't treat inherited assets as taxable income to the beneficiary. However, any income you earn from inherited assets going forward is taxable: dividends from inherited stock, rent from inherited property, and interest from inherited bank accounts are all taxable to you after the date you inherit them. If you inherit a traditional IRA or 401(k), distributions from those accounts are generally taxable as ordinary income when you take them, because the original owner never paid income tax on that money. On the estate tax side, the estate itself may owe federal estate tax if it's large enough (over $13.61 million in 2024), but that's a tax on the estate — not on you as the beneficiary. Six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) impose a separate state-level inheritance tax directly on beneficiaries, with rates and exemptions that vary by state and your relationship to the deceased.