I just saw a piece of news that mentioned the New York City Mayor, who is also a New York State Congressman, proposing to reduce the inheritance tax exemption for New York from 7.35 million dollars to 750,000 dollars and to raise the maximum tax rate from 16% to 50%.

Previously, some friends asked me why I don't consider moving to the United States, and I happened to ask my neighbor about this as well. His family initially planned to go to the United States, and Singapore wasn't even a consideration at that time.

One of the main reasons for giving up on going to the United States was that taxes are too high there. Many friends know that taxes in the United States are high because it is not a single tax, but rather a combination of federal, state, and local taxes stacked on top of each other.

The United States also taxes worldwide income. Once you become a tax resident of the United States, overseas income must be included in the U.S. tax reporting system. Although the federal inheritance tax exemption was raised to 15 million dollars in 2026, each state has its own standards. Some states impose an estate tax, some impose an inheritance tax, and some states have to contend with both types.

The key point is that state-level inheritance taxes and federal inheritance taxes are not an either-or situation; they are calculated and imposed separately. For example, New York State is a very typical case where the state exemption amount is quite different from the federal one. So, at the federal level, you may not reach the threshold for inheritance tax, but at the state level, you may already have to face inheritance tax issues.

If a person passes away in 2026, is a resident of New York State, has no spouse exemption, no charitable donations, and no complex trust arrangements, not considering other deductions for now. If his taxable estate is 30 million dollars. According to the New York State tax form, the state inheritance tax is approximately:

1,082,800 + 16% × (30,000,000 - 10,100,000) = 4,266,800 dollars.

This means New York State would take about 426.68 million dollars first.

Next, we move to the federal level. Since the federal government allows the deduction of state death taxes, the federal calculation does not directly take 30 million; instead, it first deducts the New York State inheritance tax that was just paid:

30,000,000 - 4,266,800 = 25,733,200 dollars

The federal basic exemption for 2026 is 15 million dollars, and the federal unified tax rate for amounts above 1 million dollars is 40%. The federal inheritance tax is approximately:

40% × (25,733,200 - 15,000,000) = 4,293,280 dollars

Which means an additional federal payment of about 429.33 million dollars.

Thus, the total inheritance tax burden on this 30 million dollar estate is roughly

New York State 4,266,800 + Federal 4,293,280 = 8,560,080 dollars, resulting in an overall tax burden of nearly 28.5%.

The highest is in Washington State, with a top tax rate of 35%. Not to mention other tax rates in the United States, so one of the biggest reasons many high-net-worth friends do not choose to move to the United States is that taxes are too high.

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