Estate taxes can significantly impact what your heirs receive — but many Arizona residents don’t realize how the rules work.
Here’s a quick breakdown of how federal and Arizona estate taxes will apply in 2025, and how to prepare.
Good news — Arizona does not impose its own estate tax.
However, residents are still subject to federal estate tax rules if their total estate value exceeds the IRS threshold.
For 2025, the federal estate tax exemption is projected to be around $13.5 million per individual (based on inflation adjustments).
This means most Arizona families will not owe any estate taxes.
However, that threshold is expected to drop in 2026 when the 2017 Tax Cuts expire — possibly to around $6–7 million.
Your taxable estate includes:
Real estate (your home, land, rentals)
Bank and investment accounts
Life insurance (if owned personally)
Business assets
Personal property and vehicles
Even if your estate doesn’t hit the federal limit, planning ahead helps minimize taxes and delays:
Create a Living Trust – Keeps assets organized and avoids probate.
Gift Assets During Your Lifetime – You can gift up to $18,000/year (2025 limit) per person tax-free.
Name Beneficiaries Properly – Avoid naming your estate as beneficiary.
Use a Pour-Over Will – Ensures unlisted assets are included in your Trust.