Taxes
Alabama imposes no state inheritance tax, no state estate tax, and no state death tax. The only death-related tax most Alabama families need to think about is the federal estate tax — which currently applies only to estates above a high federal exemption.
What you should know
- Alabama has no state-level inheritance tax, estate tax, or death tax — a meaningful advantage compared to several other states.
- The federal estate tax exemption is set by Congress and indexed for inflation. Most Alabama estates fall well below it.
- For estates that do approach the federal exemption, irrevocable structures — SLATs, GRATs, dynasty trusts, ILITs, QPRTs — can be used to remove assets and future appreciation from the taxable estate.
- A revocable trust does not reduce estate tax. Assets in a revocable trust still count as part of the taxable estate.
- The federal exemption has fluctuated significantly over time. Planning done during high-exemption periods can lock in benefits even if the exemption is later reduced.
Is your estate exposed to federal estate tax?
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