Do you have to worry that you pay taxes on your inheritance in Idaho?

One of the most common questions I hear from customers in my estate planning practice is: “Do my heirs have to pay taxes on their legacy?” It is a valid concern because nobody is burdened with unexpected tax invoices in a difficult time. The good news for Idaho residents is that in most cases inheritance taxes are much less worrying than many people.

Idaho has no inheritance or estate tax

First and foremost, Idaho does not impose any inheritance tax or a estate tax at the state level. This means that if you inherit assets from someone who lived in Idaho, you cannot owe inheritance taxes for these assets at the state level.

This brings the inhabitants of Idaho to a cheap position compared to states such as Maryland, Nebraska, New Jersey or Pennsylvania, the inheritance taxes of beneficiaries.

Bundes tax only affects very large goods

At the federal level there is a estate tax, which, however, only affects a small percentage of goods due to the high amount of exemption. For 2025, the exemption from federal tax is the exemption of $ 13.99 million per individual. This means that an estate has to exceed this value before a covenant would be negligent estate tax.

To be clear: this is not a tax for you as an inheritance; It is a tax on the estate before the assets are distributed. The estate itself would pay a federal tax owed, not the beneficiaries who receive inheritances.

For married couples who plan properly, the exemption in portability elections can effectively doubled to $ 27.98 million. This leads to the estate tax from the concern for the vast majority of Idaho families.

Without congress measures, however, the amount of $ 13.99 million will still change to 7 million US dollars on January 1, 2026 – but far from that.

Income taxes and specific assets

Although there are usually no “inheritance tax” for most Idahoans, certain inherited assets may have income tax effects:

Inherited pension accounts (Iras, 401 (K) S)

If you inherit a traditional IRA or 401 (K), you are generally subject to income tax, just as you would have been for the original owner. The 2019 Secure Act changed the rules for non-married partners and demanded the most to empty hereditary pension accounts within 10 years, which could possibly bring the beneficiaries to higher tax classes.

Estimated assets and reinforced basis

There are some great news here: Most of the inheritance assets (such as stocks, real estate or collector’s items) receive a so -called “reinforced basis”. This means that the tax base of the assets becomes a fair market value on the death date of the owner and essentially wiped out all capital gains that took place during the lifespan of the original owner.

For example, if your parent bought stocks for 10,000 US dollars, which was worth $ 100,000 in the death, its basis would be $ 100,000. If you later sell it for 110,000 US dollars, you only pay capital gains tax for the increase of 10,000 US dollars that occurred after the inheritance.

Life insurance

Life insurance companies are released for the beneficiaries in general income tax and make them an excellent estate planning instrument.

The prerequisite makes the difference

While the inhabitants of Idaho are lucky enough to avoid state inheritance and estate tax, the thoughtful planning remains important in order to minimize potential estate taxes for larger goods and to manage the effects of income tax for certain assets.

Consider these strategies:

• Lifespan to reduce real estate size

• Appropriate names of the beneficiaries

• trust planning for certain situations

• Strategies for non -profit donations

• Life insurance to provide liquidity

The end result

For most residents of Idaho, inheritance taxes are not an essential concern. However, if you understand how different assets are treated for income tax purposes, you and your heirs can make smart decisions. Every family situation is unique, which is why personalized advisory planning advice of invaluable value is invaluable.

Remember that the tax laws change frequently. Therefore, it is always advisable to advise yourself with a lawyer for estate planning and a tax specialist about your specific situation. With proper planning, you can make sure that your legacy passes your loved ones as efficiently as possible.

My law firm currently offers free telephone, electronic or personal consultations for creating or reviewing estate planning documents.

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Robert J. Green is a lawyer for older law, trust, a lawyer and a guardianship and owner of the Kotenai Law Group, PLLC in Coeur d’Aleene. If you have any questions about estate planning, evidence, will, trusts, lawyers, guardianships, medical planning or VA performance planning, contact Kootai law at 208-765-6555, [email protected] or visit www.kooteailaw.com.

This was presented as general information and not as legal advice. Do not take any legal decision -making without the advice of a competent lawyer after discussing your specific circumstances.