New York Estate Tax 2026: The $7.35M Cliff, Solved to the Dollar

What the statute and the Department say

Section 952(b) of the Tax Law is the rate table. It applies to the “New York taxable estate,” starts at 3.06% on the first $500,000 and steps up through 15 brackets, ending at $1,082,800 plus 16% of the excess over $10,100,000. The Department's estate tax page says the same table is printed on Form ET-706 and tells filers to use the version of the form designated for the decedent's date of death.

Section 952(c)(1) is the credit, and it is the whole story of the cliff. It has three parts:

• At or under the exclusion. The credit equals the tax from the table, so the tax is zero.
• Over the exclusion by no more than 5% of it. The credit is the table tax on an amount equal to the exclusion multiplied by one minus a fraction. The numerator of the fraction is the estate minus the exclusion; the denominator is 5% of the exclusion.
• Above 105% of the exclusion. The statute says that “no credit shall be allowed to the estate of any decedent whose New York taxable estate exceeds one hundred five percent of the basic exclusion amount.” The credit also cannot exceed the tax imposed.

The Department turns the middle case into a worksheet in its Form ET-706 instructions: line 3 is the estate minus the exclusion, line 4 is 5% of the exclusion, line 5 divides line 3 by line 4 “(carry to four decimals),” line 6 subtracts line 5 from 1.0, line 7 multiplies the exclusion by line 6, and line 8 is the table tax on line 7. That line 8 is the credit. For 2026 that means a basic exclusion of $7,350,000, a 5% band of $367,500 and a ceiling of $7,717,500 (our arithmetic).

One caution on the 2026 form. The instructions on the Department's site are the September 2025 edition, written for deaths on or after January 1, 2025, with a basic exclusion of $7,160,000 and its own printed example. We apply the same statute and worksheet with the 2026 exclusion from the Department's estate tax page. The rounding rules we use (line 5 to four decimals, line 7 and the tax to the whole dollar) are the ones that reproduce the Department's printed examples; check them against the 2026 form when it is posted.

Our calculator against the Department's four examples

All four match on every printed line. The 2025 example is the one that matters most, because it uses the current table and a seven-figure exclusion. Taken to the end, that estate of $7,354,036 owes a table tax of $685,349 and a credit of $208,011, so $477,338 is due, which is 6.5% of the estate and 2.46 times the $194,036 that sits above the exclusion (our arithmetic; the Department prints only the credit). The rate table has not changed in any of the four editions.

The 2026 cliff, tabulated

All figures are our arithmetic for a death in 2026 with a New York taxable estate as shown, the tax from the 952(b) table, the credit from the worksheet and a basic exclusion of $7,350,000.

Three things stand out. The tax is not a cliff in the sense of a jump at one dollar: an estate $100 over pays $314, and one $5,000 over pays $14,275. What it is is a band, $367,500 wide, in which most of the money above the exclusion goes to the state. At $7,500,000 the estate is $150,000 over the exclusion and owes $386,430, or 2.58 times the excess. And the full schedule resumes at $7,717,500 with a tax that is already 200% of the excess.

The 17 rows above are a sample. The CSV has the grid every $50,000 from $7,000,000 to $8,500,000 plus the points around the edges. Our earlier federal and state estate tax guide gives the same cliff in five rounded rows; the figures there for $7,400,000, $7,500,000 and $7,600,000 are the dollar figures here rounded to the nearest hundred.

The extra tax per extra dollar

The credit falls as the estate rises, so each added dollar is taxed at the rate for the estate (13.6% between $7,100,000 and $8,100,000) and also takes away part of a credit that was worth the table rate on a lower base. Because the credit base falls $20 for every $1 of estate (the 5% band divided into the exclusion), the second term is 20 times the table rate at the credit base (our arithmetic).

In the first eleven bands the tax rises faster than the estate, so the heirs' share falls as the estate grows. It bottoms at $6,976,414 for an estate of $7,692,500 and does not return to $7,350,000 until the estate is about $8,143,000, where the tax is $792,992 (our arithmetic; it ignores growth, costs and any other state's tax). This is the sense in which “$7.35 million” is a threshold worth planning around and why an estate that is a few hundred thousand dollars over has a different problem from one that is $2 million over.

What counts toward the number

The worksheet runs on the “taxable estate for New York State,” which is Schedule A of Form ET-706. For a resident it starts from the federal gross estate, subtracts property located outside New York, adds taxable gifts from Schedule D, and subtracts the federal deductions allowed for New York (spouse under Schedule M, charity under Schedule O, debts and expenses). The filing test is looser: a resident's estate must file when the federal gross estate plus includible gifts exceeds the exclusion, so an estate of $7,500,000 with a $1,000,000 charitable bequest files a return and owes nothing.

For an investor in real estate vehicles, four rules decide where the line falls.

• Fund units, REIT shares, LLC and partnership interests are not located in a place. The form's carve-out is for “real and tangible personal property located outside NYS” (Schedule B instructions). Our reading is that an interest in a Texas apartment fund is an intangible and stays in a resident's New York estate, while a Texas building deeded personally is carved out. How a particular entity is classified is a legal question for a New York attorney.
• Value is value at death. The New York gross estate is valued as of the time of death, or at the federal alternate valuation date if that election is made (Tax Law 954(b)(1)). How an illiquid fund interest with a redemption queue is appraised is a separate question; our probate guide and step-up in basis guide cover the federal side of the same valuation.
• Nothing here is portable. The Department's instructions note that New York “does not conform with the federal portability rule,” and the 952 credit refers to the decedent's own basic exclusion amount (our reading); our credit shelter and QTIP guide shows how couples use the first death's exclusion.
• The marital deduction is a deferral. A spouse's share passes under Schedule M at the first death; the survivor's own estate is then measured against $7,350,000 in the year of the second death.

Gifts: the three-year add-back

New York has no gift tax, but the estate pulls some gifts back in. The Department's instructions say: “The add back of taxable gifts has been extended for estates of decedents dying on or after January 16, 2019, and before January 1, 2032.” Tax Law 954(a)(3) adds to the New York gross estate any taxable gift under section 2503 of the Internal Revenue Code “made during the three year period ending on the decedent's date of death,” and the same paragraph ends: “Provided, however that this paragraph shall not apply to the estate of a decedent dying on or after January first, two thousand thirty-two.” A gift is not added back if it was made when the decedent was not a New York resident, before April 1, 2014, or between January 1 and January 15, 2019, or if it is real or tangible personal property with an actual situs outside New York. The extra tax caused by the add-back is treated as an obligation of the decedent and is not deductible.

The example assumes the estate is $7,300,000 after the gift. Two lessons follow. A gift only works for the state tax if the donor survives three years, and the line between fund units (added back) and out-of-state real property (not added back) is the same intangible-versus-real-property line as above. Federal consequences of the gift are separate: it uses federal exemption and the recipient takes the donor's basis (see our annual gift tax exclusion guide). The date is the other thing to watch: the add-back is written to stop for deaths on or after January 1, 2032, and the Department's own wording matches the statute.

Nonresidents who own New York real estate

A nonresident's estate must file Form ET-706 when it includes real or tangible personal property located in New York and the federal gross estate plus includible gifts exceeds the exclusion, so the filing test uses the worldwide number. The tax is computed differently. Tax Law 960(b) says the tax “shall be the same as the tax that would be due, if the decedent had died a resident,” except that the New York taxable estate “shall not include the value of, or any deduction allowable under the Internal Revenue Code related to, any intangible personal property otherwise includible in the deceased individual's New York gross estate.” On Form ET-706, Schedule A Part 2 subtracts property outside New York and intangibles from the federal gross estate before the table and the credit are applied.

Our reading of those two texts is that the table, the credit and the 105% rule run on the nonresident's New York real and tangible property alone, with the allocated deductions. On that reading a Florida resident with a $12,000,000 estate, of which $2,400,000 is a New York rental building owned personally, files a return and owes $0 because the New York taxable estate is under $7,350,000. The same person with $8,000,000 of New York buildings owes $773,200 (our arithmetic). We found no Department example for a nonresident, so confirm the point with a New York estate attorney before relying on it. A New York building held through an LLC is a different question again, since the interest may be an intangible.

A fund-heavy estate, worked

All cases are our arithmetic from assumed facts, with no deductions. A New York resident dies in 2026 with a gross estate of $7,800,000: a home of $1,600,000, a rental building held in an LLC of $2,000,000, interests in private real-estate funds and a non-traded REIT of $1,900,000, an IRA of $1,100,000 and brokerage of $1,200,000.

In the second row the heirs receive $7,350,000 and the charity $450,000, against $7,054,000 for the heirs in the first row: the bequest costs the heirs nothing, and they are $296,000 ahead (our arithmetic, before the other costs of the estate). The third row is the sharp edge of the intangible rule: the same $1,900,000 of value is worth $746,000 of New York tax as a fund and $0 as out-of-state real estate, although the other state may tax the building. The real-estate reader who holds three kinds of vehicle (a building, an LLC and a fund) is the reader for whom the answer depends on titles.

Liquidity is the next problem. The tax of $746,000 is due 9 months after death, and in this estate the cash is the $1,200,000 brokerage account; the funds may be gated or redeem on a schedule. Late filing costs 5% of the tax for each month or part of a month, up to 25%. The Department may extend the time to file by up to six months, and the time to pay by up to four years in case of undue hardship, but interest runs from the nine-month date.

Dates to watch

• Each death. The return and the payment are due 9 months after the date of death; a death on October 21, 2026 puts the due date at July 21, 2027.
• January 1, 2027. The exclusion is indexed each calendar year (Tax Law 952(c)(2)(B)), so a death after that date uses the 2027 figure, which the Department had not posted on October 21, 2026. The $7,350,000 in this page applies only to 2026 deaths.
• January 1, 2032. The gift add-back ends for deaths on or after this date unless the legislature extends it again, as it has before.
• The 2026 form. The Form ET-706 and instructions on the Department's page are the September 2025 edition. Check the Department's estate tax page for a 2026 edition and for any change in the table.

What a reader can do with this

What the documents let you check before talking to anyone:

• Find the number. Add up everything owned (home, rentals, fund and REIT interests, retirement accounts, life insurance you own), take away debts and the deductions listed on Schedule E, add gifts from the last three years, and compare the result with $7,350,000 and $7,717,500.
• Locate the band. Under $7,350,000 the tax is zero; between $7,350,000 and $7,717,500 each dollar of deduction is worth 75 to 286 cents of tax; above, 13.6 or 14.4 cents.
• Sort the assets by type. Real property outside New York, a New York building, an LLC or fund interest and a retirement account are treated differently, and titling is something a New York attorney checks, not something to change on your own.
• Date your gifts. Anything given in the last three years sits in the number for the state tax.
• Check the cash. Compare the table tax with the liquid assets that can be reached at month 9.
• Compare other states if you could move. Our pages on Illinois, Washington and New Jersey show how three other states compute the same kind of bill.

The decision, and who makes it. The estate plan is drafted by an estate-planning attorney admitted in the state, and the New York and federal returns are prepared by that attorney or a CPA who files estate returns. Appraisals of buildings and fund interests come from credentialed appraisers. A financial adviser's part is the liquidity plan for a tax that can be several hundred thousand dollars. Nothing here is a recommendation to give, bequeath or move anything.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 21, 2026: New York Tax Law 952 (nysenate.gov, Internet Archive copy) and Tax Law 954 and 960 (newyork.public.law, mirror of nysenate.gov); the New York State Department of Taxation and Finance estate tax page (tax.ny.gov); Form ET-706 and its instructions ET-706-I (9/25), and the ET-706-I editions of April 2016, April 2017 and June 2019 (tax.ny.gov); Rev. Proc. 2025-32 (irs.gov). The grid, the marginal bands and the examples are our arithmetic, with the assumptions stated, and were checked against the four worksheet examples the Department prints. This is analysis of public documents, not investment, legal or tax advice.