While people in New York may be aware of the $5.45 million federal estate tax exemption, they also need to keep in mind that the state of New York has an estate tax as well. However, until 2004, it was possible to claim state tax against estate tax exemptions in a number of states. This meant that states got the benefit of estate tax payments without increasing a person’s actual tax bill.
When this credit was repealed, it ended estate tax altogether in some states. However, in other states, this is not the case. New York is one of several states that is gradually increasing its estate tax exemption to bring it in line with the federal exemption.