Does California Have an Inheritance Tax? (2026)

Proposition 19: property tax on a parent's house

California property tax is 1% of a property's taxable value plus local voter-approved charges, and that taxable value normally rises no more than 2% a year. When a house changes hands at death it is reassessed to market value unless an exclusion applies. For many families this is the largest cost in a California inheritance.

• Who keeps the old value. For transfers since February 16, 2021, a parent's home keeps its taxable value only if it was the parent's principal residence and becomes the principal residence of the child who inherits it. At least one child who inherits must keep living there. A rental or vacation home is reassessed. (source)
• How much value is protected. The limit is the parent's factored base year value plus $1,044,586 for transfers from February 16, 2025 through February 15, 2027. Any market value above that limit is added to the taxable value. (source)
• Forms and deadlines. File the homeowners' exemption (BOE-266) within one year of the death. File the exclusion claim (BOE-19-P) within three years, or before the house is sold to someone else, whichever comes first. A late homeowners' exemption helps only from the date you file. (source)
• Grandchildren. A grandchild qualifies only if the grandchild's parent, the grandparent's child, had already died at the time of the transfer. The claim form is BOE-19-G. (source)

Collecting a small California estate without probate

California sets its limits by date of death. For deaths on or after April 1, 2025, these are the figures the courts use.

• Small estate affidavit, up to $208,850. If the gross value of the California property that would otherwise go through probate is $208,850 or less, heirs can collect bank accounts, vehicles, stock and other personal property with a signed affidavit (Probate Code §§13100 to 13101). You must wait until 40 days have passed since the death. For deaths from April 1, 2022 to March 31, 2025 the limit was $184,500. (source)
• The main home, up to $750,000. Under AB 2016, a primary residence in California worth up to $750,000 can pass to the heirs through a Petition to Determine Succession to Real Property (Probate Code §§13151 to 13154), a short court petition instead of a full probate case. The procedure is limited to the person's main home. (source)
• Other real estate of small value. Other California real property worth $69,625 or less can be transferred with an Affidavit re Real Property of Small Value (Probate Code §13200). (source)
• When everything goes to a spouse. A surviving spouse or registered domestic partner who is legally entitled to the property can file a Spousal or Domestic Partner Property Petition (form DE-221). The courts describe it as faster and less complicated than opening probate. (source)

Community property and the step-up on the house

• Your basis is the value at death. For capital gains, your cost basis in inherited property is its fair market value on the date of death, or on the alternate valuation date if the executor chooses it. Growth during the parent's lifetime is never taxed to you. (source)
• Both halves step up in California. California is a community property state. When a married person dies, the total fair market value of the couple's community property, including the surviving spouse's own half, becomes the new basis, as long as at least half of it is included in the estate. A widow or widower who sells the family home can owe little or no capital gains tax on decades of growth. (source)
• Registered domestic partners. IRS Publication 555 says this rule does not apply to registered domestic partners. Before a surviving partner sells, ask a tax adviser how much of the property gets the new basis. (source)

California income tax on an inherited IRA or 401(k)

• California taxes the withdrawals. If you live in California, money you withdraw from an inherited traditional IRA is taxable on your California return as well as your federal one, in the year you take it out. Contributions that were never deducted come back tax free. (source)
• No early-withdrawal penalty. California's extra tax on early withdrawals is 2.5%, but distributions made because of the owner's death are exempt from it, whatever your age. (source)
• Heirs who live outside California. California does not tax retirement income received by a nonresident. If your parent lived in California and you live in Nevada or Texas, California has no claim on your withdrawals. (source)

If the estate needs full probate in California

• Four months for creditors. A creditor must file a claim by the later of four months after the executor's letters are first issued or 60 days after the executor mailed that creditor a notice of administration. (source)
• One year to close, or explain. Within one year after letters are issued, the executor must file a petition for final distribution or a status report. The deadline is 18 months if a federal estate tax return is required. (source)
• Fees set by statute. The executor and the executor's attorney are each paid on the same statutory scale: 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million and 0.5% of the next $15 million. On a $500,000 estate that is $13,000 each. (source)

If the person who died lived in another state

California's rules stop at its border. If your parent lived in another state, that state's law decides what is owed, even though you live in California. Five states tax heirs directly, and they can also tax real estate there that belonged to someone who lived elsewhere.

• Kentucky inheritance tax
• Maryland inheritance tax
• Nebraska inheritance tax
• New Jersey inheritance tax
• Pennsylvania inheritance tax

What matters is where the person who died lived and where their real estate is, not where you live. Compare inheritance tax by state to see who pays and how much.