2026 tax year
Inheritance tax calculator
"Is my inheritance taxable?" has no single answer, it depends entirely on what you inherited.
There is no federal inheritance tax, and inheriting is not itself a taxable event. But what you owe later ranges from nothing to a full ordinary-income bill, depending on the asset. Cash and a Roth cost nothing; a house or brokerage account gets a stepped-up basis so only later gains are taxed; a traditional IRA is fully taxable as you withdraw it. Pick the asset to see its rule.
Only gain above the date-of-death value is taxed.
Pick what you inherited and its value.
Worked example, $100,000, two very different assets
You inherit a $100,000 brokerage account worth $100,000 at death and later sell it for $120,000; separately you inherit a $100,000 traditional IRA and withdraw it. Same headline value, opposite tax:
| Asset | Taxable amount | Estimated tax |
|---|---|---|
| Brokerage account (stepped-up basis) | $20,000 | $3,000 |
| Traditional IRA (ordinary income) | $100,000 | $23,164 |
The brokerage account's basis steps up to its $100,000 date-of-death value, so only the $20,000 of gain after you inherited it is taxed, as a long-term capital gain, $3,000. The IRA has no step-up: the whole $100,000 is ordinary income when withdrawn, $23,164. Same $100,000, roughly $20,164 apart in tax.
How each asset is taxed
| You inherit… | Tax treatment |
|---|---|
| Cash | Not taxable income to you. |
| Life-insurance payout | Tax-free to the beneficiary. |
| Roth IRA | Tax-free withdrawals; empty within 10 years. |
| Stocks / brokerage | Basis steps up to date-of-death value; only later gain is taxed, as LTCG. |
| House or property | Same step-up; sell near the inherited value and there is little or no gain. |
| Traditional IRA / 401(k) | Fully ordinary income as withdrawn; no step-up; 10-year rule. |
| Annuity | Return of basis tax-free; the gain is ordinary income. |
Questions
Is inherited money taxable?
Inherited cash is not taxable income to you, and there is no federal inheritance tax. What can be taxed is income the inherited asset later produces, a gain when you sell inherited property above its stepped-up basis, or a withdrawal from an inherited retirement account.
What is stepped-up basis?
When you inherit most property, your cost basis is reset to its fair-market value on the date of death. So decades of the deceased's appreciation are never taxed, if you sell right away near that value, there is little or no gain. Only appreciation after you inherit is taxed, as a long-term capital gain.
Why is an inherited IRA taxed so differently?
A traditional IRA or 401(k) holds pre-tax money that was never taxed, so it does not get a step-up, it is "income in respect of a decedent," fully taxable as ordinary income when withdrawn. Most non-spouse heirs must empty the account within 10 years, which can push large withdrawals into high-tax years.
Do any states tax inheritances?
A handful of states levy an inheritance tax on the heir (rates often depend on how closely related you are to the deceased), and some levy an estate tax on the estate. This calculator is the federal picture; check your state separately.
Related tools
- Estate tax calculator the tax on the estate itself
- Capital gains calculator selling inherited assets
- Gift tax calculator giving vs bequeathing
Estimate for the 2026 tax year. Inheriting is not a taxable event; the tax depends on the asset and what you do with it. Not tax or legal advice.