One of the most significant tax developments of 2026 is the continued expansion of federal estate tax relief under the One Big Beautiful Bill (OBBB). As a result, many American families—including most Vietnamese-American households—will likely never owe federal estate taxes.
Unfortunately, that does not mean estate planning can be ignored.
A common misunderstanding is that if a family is below the federal estate tax exemption, there are no tax concerns when passing wealth to children or grandchildren. The reality is more complicated. Several states continue to impose their own estate taxes or inheritance taxes, often at thresholds far lower than federal law.
For Vietnamese-American families who own property, businesses, investment accounts, or retirement assets in multiple states, understanding these state-level taxes can be just as important as understanding federal tax laws.
First, What Did the One Big Beautiful Bill Change?
The One Big Beautiful Bill significantly increased and preserved the federal estate tax exemption.
For 2026, the federal estate tax exemption is approximately:
| Status | Federal Estate Tax Exemption |
|---|---|
| Individual | About $15 million |
| Married Couple | About $30 million |
This means that most American families—including many successful business owners, professionals, and retirees—will not owe federal estate tax.
For many readers, the larger risk is no longer the IRS.
It is state tax law.
Estate Tax vs. Inheritance Tax
Before discussing specific states, it is important to understand the difference.
Estate Tax
An estate tax is assessed against the deceased person’s estate before assets are distributed to heirs.
The estate pays the tax.
Inheritance Tax
An inheritance tax is imposed on the beneficiary receiving the inheritance.
The heir pays the tax.
A family may avoid federal estate tax entirely and still face state-level estate or inheritance taxes.
States That Still Have Estate Taxes in 2026
Only a minority of states continue to impose estate taxes, but some have relatively low exemption levels that can affect middle-class and upper-middle-class families.
The following states impose an estate tax:
- Connecticut
- Hawaii
- Illinois
- Maine
- Maryland
- Massachusetts
- Minnesota
- New York
- Oregon
- Rhode Island
- Vermont
- Washington
Oregon: The State Many Retirees Overlook
Oregon deserves special attention.
While neighboring California has neither an estate tax nor an inheritance tax, Oregon maintains one of the lowest estate tax exemption thresholds in the nation.
Why This Matters
A family may have:
- A home worth $900,000
- Retirement accounts worth $500,000
- Investments worth $700,000
Total estate value:
$2.1 million
No federal estate tax would be due.
However, Oregon’s estate tax could still apply.
This surprises many retirees who assume that being under the federal exemption means they owe no taxes at death.
Washington State: A Growing Concern
Washington has become increasingly attractive for retirees because there is no state income tax.
However, Washington imposes one of the nation’s more significant estate taxes.
Families with substantial real estate holdings, businesses, or investment portfolios should pay close attention to:
- Estate tax exemptions
- Trust planning
- Family business succession planning
The combination of high property values and estate taxation can create unexpected liabilities for heirs.
New York and Massachusetts
Both New York and Massachusetts continue to maintain estate taxes.
Many Vietnamese-American families living in these states have seen home values appreciate dramatically over the past twenty years.
A home purchased decades ago for a few hundred thousand dollars may now represent several million dollars of estate value.
Without proper planning, heirs may face tax consequences that would not exist in states such as California, Texas, Florida, Arizona, or Georgia.
States With Inheritance Taxes in 2026
Inheritance taxes are less common than estate taxes.
Currently, inheritance taxes exist in:
- Iowa (largely phased out and generally no longer applicable to most beneficiaries)
- Kentucky
- Maryland
- Nebraska
- Pennsylvania
Unlike estate taxes, inheritance taxes are paid by the beneficiary.
The amount often depends upon:
- Relationship to the deceased
- Size of inheritance
- State law
Children and spouses are frequently treated more favorably than distant relatives or non-family beneficiaries.
Maryland: The Most Unique State
Maryland occupies a unique position because it is the only state that imposes both:
- Estate Tax
- Inheritance Tax
This creates a double-planning challenge.
Families in Maryland often require more sophisticated estate planning than families in most other states.
Trusts, gifting strategies, and beneficiary planning become especially important.
Why Vietnamese-American Families Should Care
Many Vietnamese-American families own assets in more than one state.
Examples include:
- Parents living in California
- Rental property in Oregon
- A child working in Pennsylvania
- Retirement relocation to Washington
Even if a family resides in a state without estate or inheritance taxes, ownership of property in a state that imposes these taxes can create unexpected consequences.
This is particularly important for:
- Family-owned businesses
- Rental real estate
- Multi-state property ownership
- Vacation homes
- Investment properties
Three Common Estate Planning Mistakes
1. Assuming Federal Law Is All That Matters
The One Big Beautiful Bill dramatically reduced federal estate tax exposure for most families.
However, state taxes remain very real.
2. Failing to Revisit Older Trusts
Many trusts and estate plans were drafted years ago under different tax laws.
A review every few years can help ensure documents still achieve their intended goals.
3. Not Understanding Where Assets Are Located
Estate taxes often depend on:
- State residency
- Property location
- Business location
Families with assets across multiple states should seek professional guidance.
The good news is that the One Big Beautiful Bill makes federal estate taxes far less likely for most American families. For many Vietnamese-American households, federal estate tax may never become an issue.
However, estate taxes and inheritance taxes have not disappeared.
States such as Oregon, Washington, New York, Massachusetts, Maryland, Pennsylvania, Nebraska, and Kentucky continue to impose taxes that can affect how much wealth ultimately reaches the next generation.
The lesson for retirees is simple:
Do not focus only on federal tax laws. Pay equal attention to the state where you live, the state where your property is located, and the state where your heirs may reside.
A thoughtful estate plan today can help preserve family wealth, reduce taxes, avoid probate complications, and provide greater peace of mind for future generations.
-Lê Nguyên Vũ-
Sources for Further Reading