Estate, Gift & GST Tax
Arizona has no state estate tax, but federal estate, gift, and generation-skipping rules still matter. These FAQs from our team cover the exemption, portability, the annual gift exclusion, and step-up in basis (8 questions).
Start with our guide
For the complete walkthrough of how the federal estate, gift, and generation-skipping transfer tax rules apply to Arizona families — the current exemption, portability, the annual exclusion, GST planning, and the step-up in basis — read our complete guide. Then dig into the focused questions below.
Read the Arizona Estate, Gift & GST Tax complete guideAll 8 questions in this topic
Open any question for the full answer.
How much can I leave my family before federal estate taxes kick in, and is that amount changing soon for Arizona residents?
The federal estate tax exemption is $15 million per person for 2026, made permanent by the One Big Beautiful Bill Act. Arizona has no state estate or inheritance tax, so the federal exemption is the only threshold Arizona residents need to consider.
Read full answerMy spouse and I want to use both of our estate tax exemptions. How does portability work?
When a spouse dies without using their full federal estate and gift tax exemption, the surviving spouse can claim the unused estate tax exemption by filing IRS Form 706. Portability is not automatic. It must be elected on a timely filed estate tax return, even if no tax is owed.
Read full answerHow much can I give to my kids or grandkids each year without triggering gift taxes?
In 2025 and 2026, you can give up to $19,000 per person per year with no gift tax consequences. Married couples can give $38,000 per person. If you exceed the annual exclusion, you file Form 709 but likely owe no tax thanks to the lifetime exemption.
Read full answerWhat is step-up in basis and how does it save my family on taxes?
Step-up in basis resets the tax basis of inherited assets to their market value at the time of owner death, erasing capital gains. Arizona's community property law provides a double step-up for married couples. This applies to real estate and investments but not retirement accounts.
Read full answerIs it better tax-wise for my kids to inherit my assets or for me to gift them while I am alive?
Inheriting is usually better tax-wise for appreciated assets because of the step-up in basis, which resets the asset's value and can eliminate decades of capital gains. Gifts carry your original cost basis, potentially creating large tax liabilities for the recipient.
Read full answerWhat Is the Generation-Skipping Transfer Tax and Could It Apply If I Leave Money Directly to My Grandchildren?
The generation-skipping transfer tax (GSTT) is a 40% federal tax on gifts and inheritances to grandchildren or anyone more than 37 years younger. In 2025, the exemption is $13.99 million per person. Most families are not affected, but high-value estates need careful planning.
Read full answerWhat is the difference between an estate tax and an inheritance tax, and does Arizona have either one?
An estate tax is paid by the estate before assets are distributed. An inheritance tax is paid by the person who inherits assets. Arizona doesn't have either one. The only potential tax at death for Arizona residents is the federal estate tax, which applies to estates above $15 million.
Read full answerDoes Arizona Have an Estate Tax or Inheritance Tax, or Is That Just a Federal Thing?
No. Arizona has no state estate tax, no inheritance tax, and no gift tax. The only estate tax that could apply is the federal estate tax, which in 2025 applies to estates over $13.99 million per person. Most Arizona families owe nothing.
Read full answerHave a question that isn’t covered here? Browse the full FAQ index or reach out to our Arizona team.