How the 105 percent estate tax cliff works
New York removes the exclusion entirely once a taxable estate passes 105 percent of the threshold. Most states tax only the amount above their exemption. New York does not.
- At or below $7,350,000. A credit cancels the tax in full. Nothing is owed and no return is required.
- Between $7,350,000 and $7,717,500. The credit phases out on a sliding scale, so only part of the exclusion survives.
- Above $7,717,500. No credit at all. The graduated rates apply to the whole estate from the first dollar.
Worked example: $400,000 of extra assets, $739,200 of extra tax
| Estate of $7,350,000 | Estate of $7,750,000 | |
|---|---|---|
| Estate of $7,350,000 | Estate of $7,750,000 | |
| New York taxable estate | $7,350,000 | $7,750,000 |
| New York estate tax | $0 | ($739,200) |
| Passing to the family | $7,350,000 | $7,010,800 |
The larger estate leaves the family $339,200 less. The marginal rate on that $400,000 band of value is 185 percent.
New York estate tax against estate value, 2026
Tax payable at each level of New York taxable estate.
$7,350,000 estate. $0 New York tax. The credit covers it in full.
$7,750,000 estate. $739,200 New York tax. No credit at all.
$400,000 of extra assets costs $739,200 in tax, so the family receives $339,200 less than a smaller estate would have left them.
