New York is one of the states that imposes its own estate tax, separate from the federal estate tax. For 2026 the New York exclusion amount is $7,350,000 per person. Below that, no New York estate tax is due. But New York’s tax has a notorious feature, the “cliff,” that can punish estates that exceed the threshold by even a little. Here is what New York families should check.
Step 1: Know the 2026 Exclusion
If a New York resident’s taxable estate is at or under $7,350,000 in 2026, the estate owes no New York estate tax. This figure is indexed and changes over time, so always confirm the number for the year of death rather than relying on an old planning memo.
Step 2: Beware the New York Cliff
Most states with an estate tax give every estate the benefit of the exclusion. New York does not. Once a taxable estate exceeds the exclusion by more than 5%, the exclusion phases out completely. That phase-out is fully gone at $7,717,500 in 2026, meaning an estate just over that figure is taxed on the entire estate from the first dollar, not just the excess. Falling off the cliff can cost hundreds of thousands of dollars on a relatively small overage.
Step 3: Calculate Honestly
New Yorkers often underestimate their taxable estate. It includes your home, retirement accounts, life insurance you own, business interests, and investments. In high-value counties, a paid-off home plus a 401(k) can quietly approach the threshold. Add it all up before assuming you are safe.
Step 4: Don’t Confuse Tools That Don’t Help
A revocable living trust avoids probate but provides zero New York estate tax savings, because you retain control of the assets. To reduce the taxable estate you generally need to give assets away in a way that removes them from your control, such as through an irrevocable trust under EPTL Article 7.
Step 5: Watch the Cliff With Lifetime Gifts
New York has no separate gift tax, but it adds back taxable gifts made within three years of death. Thoughtful lifetime gifting can bring an estate under the exclusion and away from the cliff edge, which is often the single most effective move for estates hovering near the threshold.
Step 6: Coordinate With the Federal Picture
The federal exclusion is far higher than New York’s, so many New York families owe state estate tax while owing nothing federally. Planning that ignores the New York layer leaves money on the table. Spousal planning, including the unlimited marital deduction and credit-shelter strategies, can use both spouses’ New York exclusions.
The Bottom Line
The New York estate tax rewards families who plan around the cliff and penalizes those who ignore it. Knowing your number, and how close you are to $7,717,500, is the starting point.
Consult a New York attorney. The cliff and the three-year gift add-back make New York estate tax planning unusually technical. A licensed New York estate planning attorney can run the numbers for your situation and design a plan that protects your family.
Have a question about your estate?
Talk it through with Russel Morgan — free 30-minute consult.