Tennessee Inheritance Tax

Tennessee Inheritance Tax:- A tax on the transfer of assets from a deceased person to their beneficiaries is known as inheritance tax. The Tennessee inheritance tax will be discussed in this article, along with how it varies from the estate tax, how to avoid it, and a sample of the Tennessee inheritance tax.

Tennessee Inheritance Tax
Tennessee Inheritance Tax

What is Tennessee Inheritance Tax?

The inheritance tax is levied on the transfer of assets from an individual to their beneficiaries, with the beneficiaries themselves bearing the tax liability.

The value of the deceased person’s estate that is greater than the exemption level that applies to the deceased person’s year of death is subject to inheritance tax. The fair market value of all assets less any permitted reductions for debts, administrative costs, and property leaving to a surviving spouse is the net estate. The executor, administrator, or trustee deducts the inheritance tax from the estate.

Tenn. Code Ann. §§ 67-8-301-67-8-507.

How Does It Operate?

When someone passes away, their possessions are divided in accordance with their will’s provisions or, in the absence of a will, by the laws of the state. These gifts can have to be paid for with inheritance tax, depending on the assets’ worth and the beneficiary’s connection to the deceased.

While there isn’t a federal inheritance tax, some states do. However, even in areas where there is an inheritance tax, according to the laws of each state, it does not apply to any assets given to their spouse, certain categories of assets, or select other beneficiaries.

The Filing Requirement in Tennessee

Your executor will have to decide whether or not to file an estate tax return with the state. In the event that a Tennessee citizen passes away in 2015 and their gross estate is worth more than $5 million, the executor is required to file a state inheritance tax return. After 2015, no estate tax return needs to be submitted for any deaths.

The estate is not required to pay taxes even if a return needs to be filed. To determine the taxable estate, deductions are made from the gross estate, which is essentially everything you own at death (more on this later). There won’t be any tax due if the taxable estate is less than the estate tax exemption.

Does Tennessee Have an Estate or Inheritance Tax?

Negative. Tennessee is a state without inheritance or estate taxes. However, after you pass away, the people in charge of your estate have further tax returns to file, like:

  • Individuals’ final federal and state income tax returns are due by the tax day of the year that follows their passing.
  • Due by Tax Day of the year following the person’s passing is the federal estate/trust income tax return.
  • Federal estate tax return: payable nine months following the decedent’s passing; however, an automatic six-month extension may be requested in advance of the nine-month deadline.
  • Only individual estates exceeding $12.06 million ($24.12 million for couples) in gross assets and prior taxable gift value in 2022 are required to do this.
  • The IRS mandates that estates have employment identification numbers (EINs) because they are not individuals. You can apply online, by mail, or by fax if your estate needs one.

Ways to Prevent Inheritance Tax in States with Inheritance Tax

The amount of inheritance tax due can be avoided or reduced in a number of ways outside of exemptions. Typical tactics are to:

  • As soon as you can, give the beneficiaries the assets. This enables the assets’ appreciation to escape inheritance tax.
  • You can transfer assets without paying the inheritance tax by establishing certain kinds of trusts. To do this, three typical trust arrangements are utilised:

Trusts for Spousal Lifetime Access (SLAT): You can put assets into a trust with a SLAT, and during your lifetime, both you and your spouse will be able to access the assets.

You may also designate beneficiaries who are your children and other descendants. A common arrangement for trusts is to make the children the primary beneficiaries solely in the event of your spouse’s death.

Grantor Retained Annuity Trusts (GRATs): To transfer assets to future generations, 99 of the 100 wealthiest Americans use trust structures. You can transfer assets into a GRAT trust; you won’t use up any of your lifetime gift exemption, and any appreciation above a certain percentage will pass estate tax-free to your beneficiary or trust. Therefore, if you are ready to give some assets away to beneficiaries during your lifetime, you can significantly lower the size of your taxable estate while leaving assets for your descendants.


In certain states, beneficiaries may face a substantial financial burden due to the inheritance tax. Knowing if it affects you, how it operates, and the various approaches that may be taken to lessen or prevent it are crucial. People can make plans to reduce the inheritance tax that their beneficiaries will have to pay by being aware of the distinctions between inheritance tax and estate tax as well as the particular regulations governing the state’s inheritance tax.

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