Many Virginians worry about estate taxes — will the government take a large portion of what they leave to their children? The good news for most Virginia families: Virginia has no state estate tax and no state inheritance tax. However, the federal estate tax still applies to very large estates. This article explains what you need to know.
This is general legal information, not advice for your specific situation. Tax laws change. Consult a licensed estate planning attorney and a tax professional for guidance specific to your estate.
Does Virginia Have an Estate Tax?
No. Virginia repealed its state estate tax effective July 1, 2007. Since then, Virginia has not imposed any estate tax — also called a “death tax” — on estates of Virginia residents. Assets passing to heirs at death are generally not taxed at the state level in Virginia, regardless of the size of the estate. Note: Virginia Tax guidance indicates that certain remainder interests may be subject to a Virginia inheritance tax in limited circumstances; consult a Virginia tax attorney if your estate involves such interests.
Does Virginia Have an Inheritance Tax?
No. Virginia does not impose an inheritance tax. An inheritance tax (different from an estate tax) is a tax on the person receiving the inheritance, not on the estate itself. Some states — like Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — have inheritance taxes. Virginia does not.
This means Virginia heirs generally do not owe any state tax simply because they inherit money, property, or other assets from a Virginia resident.
What About the Federal Estate Tax?
While Virginia has no state estate tax, the federal estate tax still applies to estates above a certain threshold. Here is what you need to know:
- Federal basic exclusion amount (2026): Legislation enacted in 2025 changed the federal estate tax rules. The IRS has confirmed the basic exclusion amount for 2026 is $15,000,000 per person. A married couple can shelter up to $30,000,000 combined through portability. The annual gift tax exclusion for 2026 is $19,000 per recipient. As with any tax figure, consult a qualified tax professional or estate planning attorney for guidance specific to your estate.
- Married couples: A married couple can potentially shield up to double the individual exemption through “portability” — a provision that allows a surviving spouse to use any unused portion of their deceased spouse’s federal exemption.
- Tax rate: The top federal estate tax rate is 40% on assets above the exemption.
For the vast majority of Virginia families, the federal estate tax is not a concern — estates under the exemption amount owe nothing. But for families with larger estates, proactive planning is essential.
What About Gift Taxes in Virginia?
Virginia has no state gift tax. Federally, gifts are subject to the federal gift tax, but the annual gift tax exclusion allows each person to give up to $19,000 per recipient per year (the 2026 annual gift tax exclusion, confirmed by the IRS) without using any of their lifetime exemption. Married couples can combine their exclusions to give up to $38,000 per recipient per year.
Gifts above the annual exclusion don’t automatically trigger tax — they reduce your lifetime federal estate and gift tax exemption. Tax is only owed if your cumulative taxable gifts plus your estate exceed the total lifetime exemption at death.
Capital Gains Tax on Inherited Property in Virginia
While there is no Virginia estate tax, heirs who inherit property should be aware of federal capital gains tax rules. When you inherit property, you generally receive a “stepped-up” cost basis equal to the fair market value of the property at the date of the decedent’s death.
This means: if your parents bought their home decades ago for $50,000 and it’s worth $400,000 when they die, and you inherit it and immediately sell it for $400,000 — you owe no capital gains tax. Your tax basis “steps up” to $400,000 at the date of death.
This step-up in basis is one of the most valuable tax benefits in estate planning. It’s a key reason why holding appreciated assets until death — rather than gifting them during your lifetime — is often more tax-efficient for your heirs.
Virginia Probate Tax: Not an Estate Tax, But Worth Knowing
While Virginia doesn’t have an estate tax, it does impose a probate tax on assets passing through probate. This is not the same as an estate tax — it’s a relatively modest administrative fee charged at the time of probate. In Virginia, the probate tax is approximately $1 per $1,000 of the probate estate value at the state level, plus a local fee charged by the county or city.
For more on Virginia probate costs, see our detailed article on Virginia probate costs.
Do You Need to Worry About Estate Taxes?
For most Virginia families, the answer is no — not at the state level. Whether the federal estate tax applies depends on the total value of your estate and the exemption in effect at your death. Here’s a simple framework:
- Estate under $15,000,000 (per person): The federal estate tax is unlikely to apply under current 2026 law. Virginia has no state estate tax or inheritance tax. Focus on avoiding probate, coordinating beneficiary designations, and planning for incapacity.
- Estate over $15,000,000: Federal estate tax planning becomes important. Strategies may include irrevocable trusts, charitable giving, annual gifting, family limited partnerships, or other advanced techniques. Consult a Virginia estate planning attorney with tax planning experience.
- Uncertain where you fall: Schedule a consultation to get a realistic picture of your total estate value and whether tax planning should be part of your plan.
At Prior Law, we serve families throughout the Shenandoah Valley with clear, practical estate planning advice. We’re happy to help you understand whether estate taxes are a concern for your family — and what to do about it if they are.
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Frequently Asked Questions
Is there an inheritance tax in Virginia?
No. Virginia does not impose an inheritance tax on recipients of inherited property. Heirs who receive assets from a Virginia estate do not owe any state tax on that inheritance.
What is the Virginia estate tax exemption?
Virginia has no estate tax and therefore has no exemption amount. The relevant exemption is the federal basic exclusion amount — confirmed by the IRS at $15,000,000 per person for 2026 following legislation enacted in 2025. The annual gift tax exclusion is $19,000 per recipient for 2026. Consult an estate planning attorney or tax professional for current figures.
When did Virginia repeal its estate tax?
Virginia’s estate tax was repealed effective July 1, 2007. Before that date, Virginia had a “pick-up tax” that collected an amount equal to the maximum federal state death tax credit — but since the federal credit was phased out, Virginia’s estate tax was effectively $0 before the formal repeal.
Do I have to pay taxes on money inherited in Virginia?
Generally, no — inherited money itself is not taxable income to the recipient in Virginia or under federal law. However, income earned by inherited assets after you receive them (interest, dividends, rents) is taxable. And if inherited property has appreciated in value, selling it above its stepped-up basis could trigger capital gains tax. Consult a tax professional for guidance on your specific inherited assets.
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Tax laws are subject to change; always confirm current figures with a qualified tax professional. Consult a licensed Virginia estate planning attorney and a qualified tax professional for guidance specific to your situation. No attorney-client relationship is formed by reading this article.
