Moving large sums to family can trigger gift tax filings, change the tax a recipient pays later, or affect an estate. A little planning can save a lot of tax.
Why it matters
- Gifts above $19,000 per person in 2026 require a gift tax return and use up lifetime exemption.
- Gifted assets keep the giver’s original cost basis, so the recipient may owe more capital gains tax later.
- Inherited assets usually get a step-up in basis to the value at death, which can erase gains.
- Estates above $15 million per person in 2026 may owe federal estate tax of up to 40%.
Federal inheritance tax
There is no federal inheritance tax on the person receiving assets. A few states do charge one, including Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania, with the rate depending on the relationship.
Inherited retirement accounts
Most non-spouse heirs of an IRA or 401(k) must empty the account within 10 years, and withdrawals from traditional accounts are taxed as ordinary income. This can push the heir into higher brackets.
This is general information. For significant transfers, speak with an estate attorney or CPA.