Planning Ahead: Guide to Estate Taxes in Oklahoma

When someone passes away, you may wonder what happens to their home, bank accounts, or personal items. Or if you’ve worked hard to build up your own estate, you may want to know how to pass your assets down without running into federal or Oklahoma estate taxes.

These are common questions—and it’s smart to ask them now. Estate planning isn’t just for the wealthy. It’s about making sure your wishes are followed and your family doesn’t have to deal with extra stress. An estate planning attorney can help you create a plan that fits your life and protects the people you love.

What Is an Estate Tax?

An estate tax is a tax on a person’s assets after they die. The tax is taken out of the estate before the remaining assets are passed on to heirs. The federal government has one, and some states have their own separate estate tax.

What's the Difference Between Estate Tax and Inheritance Tax?

An inheritance tax is a tax on the person receiving the property, not the estate itself. Estate tax is paid out of the total estate before anything is given to the heirs. Inheritance tax is paid by the person who gets the inheritance, and not all states have one.

What’s the Difference Between Estate Tax and Probate?

Probate is the legal process of settling someone’s estate after they die. Probate can take a long time, because it includes paying off debts, confirming the will (if there is one), and giving out property to the heirs. Estate tax is separate from probate, but they are connected. If the estate is large enough to owe federal estate taxes, those taxes must be paid during probate before any assets are passed on to heirs.

Does Oklahoma Have an Estate Tax?

No, there is no Oklahoma estate tax. However, some other states do have one. For example, Illinois and Minnesota both collect estate taxes, among others. If you own property in one of those states, and its value is over that state’s exemption limit, your estate could be taxed there—even if you live in Oklahoma. Be sure to check the laws of the states where the property is owned.

Does Oklahoma Have an Inheritance Tax?

No, Oklahoma doesn’t have an inheritance tax—but nearby states like Nebraska, Iowa, and Kentucky do. If someone who lives in one of those states leaves you an inheritance, you might owe inheritance tax based on that state’s law, even if you live in Oklahoma. Always check the state law where the person resides.

What About the Federal Estate and Inheritance Taxes?

The federal government does have an estate tax. It’s a progressive tax that can go as high as 40% for taxable estates over $1 million. However, it only applies to estates worth more than $13.99 million per person. Anything below that is not taxed. Anything above that is considered your taxable estate. For example, if your estate is worth $14.5 million, your taxable estate will be $510,000: 14,500,000 − 13,990,000 = 510,000. That amount will be subject to the estate tax.

If you’re married, you can leave any amount to your spouse tax-free. That’s called the unlimited marital deduction. But once your spouse passes away, the total estate will be taxed if it’s over the limit.

Keep in mind that the current exemption is set to drop on January 1, 2026, when the Tax Cuts and Jobs Act expires, to about $7.15 million. This change could affect more families, especially those with farms, businesses, or real estate.

There is no federal inheritance tax. You don’t have to report an inheritance as income on your tax return. But any earnings or profits you make from inherited assets—like selling a house or investments, or getting distributions from a retirement account—can be taxed.

Strategies for Minimizing Estate Taxes and Probate

Even though there is no Oklahoma estate tax, larger estates still need to plan for the federal tax. The strategies below can also help keep your estate out of probate, which can save time and money. An attorney can walk you through these options and help you decide what works best for your situation.

Take Advantage of Gift Tax Exclusions

As of 2025, you can give up to $19,000 each year to as many people as you want without triggering the federal gift tax. If you’re married, you and your spouse can give $38,000 total per person each year. You can also pay someone’s school tuition or medical expenses directly, and those payments won’t count against your gift limit. However, if you open a 529 plan for tuition, contributions are considered gifts.

Put Assets into a Trust

A trust lets you move assets out of your name and into a legal structure that follows your rules. An attorney can help you set up trusts like the following:

• Generation Skipping Trusts (GSTs): These skip your children and go to your grandchildren, which can lower estate taxes over time.
• Irrevocable Life Insurance Trusts (ILITs): These keep life insurance payouts out of your taxable estate.
• Qualified Personal Residence Trusts (QPRTs): These let you pass your home to your heirs at a lower value for tax purposes.
• Charitable Remainder Trusts: These pay you income during your life, then give the rest to a charity after you pass, which can reduce your estate tax.

Get Started Planning for Estate Taxes and Probate

You don’t have to be worried about federal or Oklahoma estate taxes to benefit from planning for your future. Even small and mid-sized estates can run into probate issues or miss chances to give loved ones more. The right estate plan can help your family avoid probate, reduce taxes, and carry out your wishes smoothly. If you’re ready to start, contact Plan Ahead Legal today. We’re here to help you protect your family and your legacy.