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The Vermont Estate Tax System. Vermont recently enacted new legislation that imposes a state estate tax regardless of whether there is a federal estate tax imposed. Under this new system, estates in excess of $2.75 million dollars are subject to tax (it is unclear whether lifetime gifts are included in this threshold).
Inheritance Tax vs. Income Tax. Although you don't have to pay income tax on your inheritance, you may have to pay other taxes. Six states impose an inheritance tax as of publication: Nebraska, Iowa, Kentucky , Pennsylvania, New Jersey and Maryland.