Federal Bill: $0. New York Bill: $4.3M.

A married couple in New York. Worth $30 million. Congress just handed them a $15 million estate tax exemption per person. Federal estate tax owed: zero.

New York state estate tax owed: $4.3 million.

Right.

The One Big Beautiful Bill Act made the $15 million exemption permanent. No sunset. Goes up with inflation starting 2027. The federal estate tax now hits roughly 0.1% of Americans who die. For everyone else, the death tax is gone.

Party's over. Everybody relax.

Twelve states and DC still run their own estate tax. Separate rules. Separate thresholds. Separate bills.

Oregon starts at $1 million. Not indexed. Hasn't moved since 2012. A paid-off house in Portland and a decent 401(k) can clear that line. The owner never felt rich. Oregon doesn't care.

Washington state tops out at 35% — highest of any state, though it drops back to 20% in July 2026. Massachusetts kicks in at $2 million. That's a three-bedroom outside Boston and a retirement account. You don't need to feel wealthy to trip the wire.

And then there's New York.

New York's estate tax exemption for 2026 is $7.35 million. Sounds generous. It's a trap.

Go $50,000 over the line. Your estate now owes $136,000. That's not a typo. Fifty thousand dollars triggers a hundred and thirty-six thousand in tax.

Go $450,000 over. The exemption vanishes. Not in part. All of it. The full estate gets taxed. The bill hits $745,000.

I mean, it's not a cliff. A cliff at least has a slope on the other side. This is a hole in the floor. You step one foot past the line and fall through.

The federal system has something called portability. First spouse dies, the survivor picks up whatever exemption the dead spouse didn't use. Clean and simple.

Most states don't do this. Only Hawaii and Maryland do. New York? No portability.

So here's what happens. First spouse dies. Everything rolls to the survivor tax-free. That's the marital deduction. One spouse leaves everything to the other. No tax. Good so far.

Second spouse dies with $10 million. Federally? Still under $15 million. Still zero.

New York? The full $10 million gets taxed. The state bill lands over $1 million. One death. One state. One bill nobody planned for.

You can gift your way under the cliff. New York has no gift tax. Oregon has no gift tax. Most of these states don't. Give assets away during life. The state can't touch them. The feds don't care because you're miles under $15 million.

But. New York and Oregon both have a three-year clawback. Die within three years of the gift, and it snaps back into the estate for state tax purposes.

Here's why it's still a no-lose bet. If you die inside the three years, the gift gets added back. Your estate owes the same tax it would have owed anyway. You lost nothing. If you survive three years, the gift sticks. The estate drops below the cliff. The state tax bill goes to zero.

The law firm Venable put it this way:

Sure. Same tax or no tax. Those are the only two outcomes. The bet only pays or pushes.

One thing to know. Gifts carry your original cost basis. Say you bought stock at $10. You gift it. Your kid sells at $50. They owe capital gains on the full $40. If you'd held it until death, they'd get a stepped-up basis. Meaning the tax basis resets to $50. They sell at $50. Gains: zero. So the gift saves estate tax but might cost capital gains tax. Depends on the math.

The spread between the federal exemption and New York's is now $7.65 million. Widest it's ever been. And it keeps growing.

Congress built a $15 million front door. Everybody walked through celebrating. The state left a $7 million trap in the hallway.

I dunno. Check your state.