Does Tennessee Tax Your Estate? What Nashville Families Should Know in 2026

Quick answer: For a death in 2026, Tennessee does not tax the estate. The Department of Revenue’s notice says the inheritance tax “will not apply to estates of decedents dying in 2016 or after.” The federal estate tax is separate. A federal return is required only when the gross estate, plus certain gifts, is above the filing threshold, which is $15,000,000 for 2026. The IRS says most relatively simple estates do not need to file. For many Nashville families, then, a living trust is a question of control rather than tax.

Does Tennessee still have an inheritance tax?

Not for recent deaths. Public Chapter 1057, passed in 2012, raised the exemption in steps for deaths in 2013, 2014 and 2015, then ended the tax for dates of death on or after January 1, 2016.

The notice is dated September 2012 and says it is current as of its date of publication. It is still the state’s own plain statement of the change, but tax law can move, so check for anything newer before you rely on it.

What about an older estate that was never closed?

The date of death controls, so an older estate can still fall under the old rules. For deaths from 2006 through 2012 the exemption was $1,000,000. The tax also reached non-residents with Tennessee real property or tangible personal property located in Tennessee, using an apportioned exemption.

Here is how that lines up in Davidson County. The Probate Court’s closing guidelines list an inheritance tax release among the items to file, with a note that it is not required if the person died in 2015 or later. The clerk’s forms also include an affidavit waiving inheritance tax. Our guide to a will or a living trust in Nashville has the full closing list.

When is a federal estate tax return required?

The IRS says a return must be filed if the gross estate of a U.S. citizen or resident, increased by adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of death.

Year of death	Tennessee inheritance tax exemption	Federal filing threshold
2013	$1,250,000	$5,250,000
2014	$2,000,000	$5,340,000
2015	$5,000,000	$5,430,000
2016	Tax no longer applies	$5,450,000
2025	Tax no longer applies	$13,990,000
2026	Tax no longer applies	$15,000,000

The IRS also says the basic exclusion amount was raised to $15,000,000 for 2026 by Public Law 119-21, signed on July 4, 2025.

Do most estates have to file?

The IRS says most relatively simple estates do not require a return. It describes those as estates with cash, publicly traded securities, small amounts of other easily valued assets, no special deductions or elections, or jointly held property. The test is still the filing threshold, so add everything up before assuming.

What counts toward the gross estate?

The IRS describes it as an accounting of everything you own or have certain interests in at the date of death, at fair market value rather than what you paid. It may include cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

Certain deductions then apply. The IRS lists the marital deduction for property passing outright to a surviving spouse, the charitable deduction, mortgages and debt, administration expenses and losses during administration. Lifetime gifts that are complete are generally not in the gross estate, but taxable gifts are still used in computing the tax.

Property owned with someone else is less simple. For a half interest in a farm, building or business, the IRS says you would probably include only half its value, but that many factors affect the answer.

Does a living trust change any of this?

Not by itself. The IRS lists trusts among the property that may be included, and it adds a point many people miss: the gross estate will likely include non-probate as well as probate property. So keeping something out of probate and keeping it out of the gross estate are two different questions. Whether a particular trust counts depends on its terms, which is a question for your lawyer or tax professional.

What a living trust does offer is a written plan for who controls the property and who receives it. If a home is going into the trust, the deed has to be handled too.

What should married couples know?

A surviving spouse can receive a deceased spouse’s unused exclusion, known as portability, but only if a timely estate tax return is filed. The IRS says the return is due nine months after the date of death, and an automatic six-month extension is available by filing Form 4768 on or before the due date. The return must be filed to make that election regardless of the size of the gross estate.

If that date was missed and the estate was under the filing threshold, the IRS says Revenue Procedure 2022-32 offers a simplified way to seek more time. If the estate was over the threshold, no extension of time to elect portability is available.

What costs matter more for most families?

If federal tax is not in play, the practical costs tend to sit elsewhere. Think about the court filing fees and closing steps, the cost of any legal help, and, if long-term care is involved, TennCare estate recovery. These are the items worth pricing out with your family.

Why talk with Thompson Law in Nashville?

Attorney Christopher “Kim” Thompson has practiced in Middle Tennessee for over 30 years, and you work directly with him. For tax computations, involve a tax professional as well; the IRS itself recommends that if its resources do not answer your question.

Read more about wills and estate matters. Call (615) 832-2335 for a free consultation, or contact the firm.