Is There an Inheritance Tax in Arizona?

Is there an inheritance tax in Arizona? How about an estate tax? Do federal taxes apply? If you have found yourself wondering about the answers to these questions, the legal team at Rilus Law can help you get the answers. 

If you or a loved one has recently inherited an Arizona estate, then these are the types of questions that may arise. Today, our expert Phoenix estate planning attorneys are covering everything you need to know about Arizona inheritance tax laws.

Do You Pay Inheritance and Gift Taxes in Arizona?

Generally, an inheritance tax requires beneficiaries to pay taxes on assets they have inherited from someone who has passed away. However, it is not a requirement nationwide. It is up to each state to decide whether or not they want to implement the tax.

So, is there an inheritance tax in Arizona? The answer is no. However, if you are inheriting property from someone that lives in another state, you might find yourself subject to that state’s inheritance taxation laws. For example, Pennsylvania has an inheritance tax that applies to out-of-state heirs. It’s best to consult with an Arizona estate planning attorney if you are unsure.

Do You Pay Estate Tax in Arizona?

A lot of people confuse inheritance tax with estate tax, but the terms are not interchangeable. While inheritance taxes are levied on those who inherit money, estate taxes are taken directly from the estate after the assets have been dispersed to beneficiaries. Lucky for us, Arizona is one of the 38 states that do not implement an estate tax on residents.

Are There Federal Estate Taxes?

While Arizonans are free from paying a state inheritance, gift, or estate tax, they are still required to comply with federal estate taxes. As of 2022, the federal estate tax exemption is $12.06 million ($24.12 for married couples), and if an estate exceeds that amount, the owner is subject to a federal tax of up to 40 percent.

Dying Without a Will in Arizona

So, what happens if you die without a will in Arizona? If you do not have a will at the time of your death —or if your will is deemed invalid— then your property will be subject to the intestate succession laws of Arizona. This means the courts will determine who inherits your assets, which could mean going against what you would have wanted.

Arizona is one of nine community property states that deems that all property shared between spouses is communal. Under the community property law, if someone dies without a will in Arizona and is married at the time of their death, all of their assets will be transferred to the surviving spouse.

Call a Phoenix Estate Planning Attorney

We hope that this blog post answered any questions you had about inheritance tax in Arizona. If you or a loved one has questions about an inheritance or has any estate planning needs, our skilled attorneys are here for you.

Rilus Law is a full-service estate planning and probate administration law firm, where our legal experts work diligently to ensure that your legacy is preserved. Contact us today to schedule your free personal family legal session.