Arizona and Estate Tax: What Smart Families Should Know
Arizona estate tax rules are more favorable than in many other states—making Arizona an appealing place for retirees and families building long-term plans. But that doesn’t mean you can skip estate planning entirely. Here’s what you need to know about taxes, exemptions, and smart planning strategies.
Does Arizona Have an Estate Tax?
No. Arizona estate tax law is clear: the state does not impose a state-level estate tax. That means when you pass away, Arizona won’t levy a tax on the value of your estate.
This is welcome news—especially when compared to states like Oregon and Massachusetts, which tax estates as small as $1 million.
What About an Inheritance Tax?
Also no. Arizona does not have an inheritance tax either. Inheritance tax is a levy paid by the person who receives an inheritance, rather than by the estate itself.
States like Kentucky, Iowa, and Nebraska impose this type of tax, but Arizona estate tax law provides no such burden for beneficiaries. That said, if you inherit property located in a state that does have inheritance taxes, you could be subject to that state’s rules—even as an Arizona resident.
But What About the Federal Estate Tax?
Even though Arizona estate tax doesn’t exist at the state level, the federal government may still tax your estate if its value exceeds the federal exemption limit.
- In 2025, the federal exemption is $13.99 million per person (or $27.98 million per married couple).
- Amounts above the exemption are taxed at 40%.
- In 2026, the exemption is scheduled to drop to around $7 million per person unless new legislation passes.
Tip: Even if you’re not near the current threshold, high-value assets like real estate, life insurance, or business equity can grow your estate value over time—and could eventually bring you into taxable territory.
Why You Still Need an Estate Plan in Arizona
While Arizona estate tax isn’t a concern, a full estate plan remains critical for other reasons:
- Probate Avoidance: Arizona probate can still be time-consuming and public.
- Protecting Your Heirs: Especially important for minor children or dependents with special needs.
- Control and Clarity: Ensure your assets are distributed exactly how you intend.
Key Takeaways
- Arizona estate tax and inheritance tax don’t exist at the state level.
- The federal estate tax may still apply for larger estates.
- A complete estate plan is essential—for avoiding probate, protecting your legacy, and preparing for out-of-state complexities.
If you’re unsure whether your estate may trigger federal taxes, or if you’re receiving an inheritance from another state, it’s wise to consult with an estate planning attorney or use a platform like TrustHandled that offers guidance tailored to Arizona law.
TrustHandled simplifies your planning with tools for Arizona residents, secure digital storage, and ongoing legal updates—so you’re always one step ahead.
