Does California Have an Estate or Inheritance Tax?
No, and it hasn't since 2005. What heirs can still owe: federal estate tax on very large estates, income tax on some inheritances, and higher property tax.
No. California has no estate tax, no inheritance tax and no gift tax. Voters repealed the inheritance and gift taxes in 1982, and the state's remaining estate tax ended for deaths on or after January 1, 2005. What can still apply: the federal estate tax on estates over $15,000,000 (2026), income tax on inherited retirement accounts, and a property tax reassessment on inherited real estate.
How California's estate tax went away
Before 1982 California had an inheritance tax and a gift tax. In 1982 voters passed Proposition 6, which repealed the inheritance and gift taxes and barred the state and local governments from imposing inheritance taxes again. It left only a "pick-up" estate tax: an amount equal to the credit the federal estate tax allowed for state death taxes, so it cost estates nothing extra.
The 2001 federal tax law phased that credit out: cut by 25% in 2002, 50% in 2003, 75% in 2004, and eliminated from 2005. With no federal credit to "pick up," California's tax dropped to zero, and no California estate tax return has been required for deaths since then.
The federal estate tax
The federal tax applies only to estates worth more than the basic exclusion amount, $15,000,000 per person for deaths in 2026 (up from $13,990,000 in 2025). The July 2025 federal tax law made that higher exclusion permanent and indexes it for inflation. The rate on the amount above the exclusion reaches 40%.
- A married couple can effectively shelter twice that, because the surviving spouse can keep the unused exclusion of the first spouse to die (portability). The estate has to file a federal Form 706 to claim it, even when no tax is owed.
- Everything left to a spouse who is a U.S. citizen passes tax-free, and so does anything left to charity.
- The estate pays the tax before the heirs receive their shares. Heirs don't report it.
Very few estates owe it, but it applies to California residents the same as anyone else.
Gifts
California has no gift tax. Federally, you can give up to $19,000 per person per year (2026) without filing anything. Larger gifts require a federal gift tax return, but tax is owed only after your lifetime gifts and your estate together pass the basic exclusion.
Taxes heirs can still owe
- Inherited IRAs and 401(k)s. Withdrawals from traditional retirement accounts are taxable income to the heir, on both the federal and California returns. Most non-spouse heirs must empty the account within 10 years. Roth accounts are generally tax-free.
- Selling inherited property. Inherited assets generally get a stepped-up basis: their value at the date of death. Sell soon after and there's usually little gain. Any gain after that is taxed by California as ordinary income; see California capital gains tax.
- Income the estate earns before it's distributed (rent, interest) is taxable to the estate or the beneficiaries.
The real California cost: property tax under Prop 19
For many families the biggest tax hit from an inheritance isn't a death tax at all; it's the property tax reassessment. Since February 16, 2021, Proposition 19 lets a child or grandchild keep a parent's low Prop 13 assessed value only if:
- the home was the parent's primary residence,
- the child moves in and claims the homeowners' or disabled veterans' exemption within one year, and
- the home's market value is no more than the parent's assessed value plus $1,044,586 (the figure through February 15, 2027). Above that, the excess is added to the assessed value.
Rentals, vacation homes and inherited houses the heir doesn't live in are reassessed to market value. On a home bought decades ago, that can multiply the tax bill. The Prop 19 Inherited Property Calculator shows the new assessed value and tax; see also the Prop 19 exclusion cap.
Probate costs are not a tax, but they add up
Estates that go through California probate pay statutory fees to the executor and the attorney, each set by law as a percentage of the estate's gross value. A living trust avoids probate; small estates may qualify for simpler procedures. The Probate Fee Calculator shows the statutory fees.
Frequently Asked Questions
Does California have an inheritance tax?
No. California voters repealed the inheritance tax in 1982 (Proposition 6), which also bars the state and local governments from imposing one. Heirs in California owe nothing to the state just for receiving an inheritance.
Does California have an estate tax?
Not since 2005. Its only estate tax was a 'pick-up' tax equal to a federal credit, and that credit was phased out between 2002 and 2005. No California estate tax return has been needed for deaths on or after January 1, 2005.
How much can you inherit without paying taxes in California?
There is no California limit. Federally, an estate pays tax only on the amount above the basic exclusion, $15,000,000 per person in 2026. The estate pays that tax, not the heir.
Does California have a gift tax?
No. Only the federal gift tax applies. You can give up to $19,000 per recipient in 2026 without even filing a federal gift tax return, and larger gifts usually just reduce your federal lifetime exclusion.
Do I pay tax when I sell an inherited house in California?
Only on gain above the house's value at the date of death. Inherited property generally gets a stepped-up basis, so selling soon after inheriting often produces little or no taxable gain. Holding it can raise the property tax, though, under Proposition 19.
This article is for general information only and is not tax or legal advice. Sources: Assembly Revenue and Taxation Committee reference book, ch. 3D "Estate Tax"; IRS "What's new - Estate and gift tax"; IRC 1014 and 2001; FTB Summary of Federal Income Tax Changes (P.L. 119-21 sec. 70106); BOE Proposition 19 guidance; California Probate Code 10810.