What Is the NYS Estate Tax Threshold?
The New York State (NYS) estate tax threshold is the amount an estate can be worth before it becomes subject to New York’s estate tax.
As of 2025, the NYS estate tax exemption is approximately $6.94 million per individual.
That means if the total value of a deceased person’s estate — including real estate, cash, investments, and personal property — is below $6.94 million, no NYS estate tax is owed.
If the estate exceeds that amount, the tax can apply to the entire estate, not just the excess.
The “Cliff” Effect
One unique aspect of the New York estate tax is its cliff effect — and it can be costly if not planned for.
If an estate exceeds 105% of the threshold (about $7.29 million in 2025), the entire estate becomes taxable, not just the amount above the limit.
âś… Example:
- Estate value: $6.94 million → No estate tax
- Estate value: $7.1 million → Only a portion taxed
- Estate value: $7.3 million → Entire amount taxed
This makes strategic estate planning essential for New Yorkers whose assets are near the threshold.
What Counts Toward Your Estate Value
Your taxable estate includes the total value of all assets you own at death, including:
- Real estate (homes, condos, investment properties)
- Cash, stocks, and bonds
- Business interests
- Retirement accounts
- Life insurance (if owned directly by the decedent)
- Personal property and vehicles
Even modest homeowners in NYC can approach the threshold due to rising property values, making estate tax awareness crucial for middle- to upper-income families.
Estate Tax Rates in New York
If your estate exceeds the threshold, it is taxed based on progressive rates ranging from 3.06% to 16%.
The exact tax depends on the estate’s size after deductions and credits.
đź’ˇ Note: The NYS estate tax is separate from the federal estate tax, which has a much higher exemption ($13.61 million in 2024, expected to adjust in 2025).
Planning Strategies to Reduce or Avoid NYS Estate Tax
Smart planning can help protect your legacy and keep more wealth in the family.
Here are several proven strategies:
- Lifetime Gifting
- You can make annual gifts (up to $18,000 per recipient in 2024, adjusted annually) without triggering gift taxes.
- Lifetime gifts reduce the size of your taxable estate.
- Irrevocable Trusts
- Transferring assets into a properly structured trust can remove them from your taxable estate while still benefiting your heirs.
- Charitable Donations
- Donations to qualified charities lower your estate’s taxable value and align with philanthropic goals.
- Life Insurance Trusts (ILITs)
- Place life insurance policies in an irrevocable life insurance trust so death benefits aren’t counted as part of your estate.
- Marital Deduction
- Assets left to a spouse are generally exempt from estate tax due to the unlimited marital deduction.
- Property Transfers and Step-Up Basis
- Heirs can receive a step-up in basis on inherited property, minimizing future capital gains taxes when selling.
Why This Matters for Real Estate Owners
If you own property in New York City, Long Island, or Westchester, your real estate alone could push your estate near the threshold.
Without planning, your heirs might face unexpected estate taxes or even need to sell assets to cover the bill.
Working with an estate planner or CPA familiar with New York’s tax laws ensures your property transfers smoothly and tax-efficiently.
Looking Ahead
While the federal exemption is currently high, it’s set to sunset after 2025, potentially dropping back to around $6 million.
That change could impact New York residents even more, since both federal and state taxes might apply depending on estate size.
Final Thoughts
The NYS estate tax threshold can make a big difference in what your family ultimately inherits. Understanding how it works — and planning proactively — can save hundreds of thousands in taxes.
Whether you’re a homeowner, landlord, or investor, it’s wise to consult a professional to protect your estate, reduce taxes, and preserve your wealth for future generations.