Only 17 states, plus Washington, D.C., still have estate taxes or inheritance taxes (or both) on the books. Getty Images By Rachel L. Sheedy, Editor March 9, 2018From Kiplinger's Retirement Report Dying is getting cheaper. While the latest federal tax overhaul doubles the estate-tax exemption, the trend of states loosening their own grip on estates continues in 2018.SEE ALSO: 13 States That Tax Social Security Benefits Delaware is one of the latest states to bury its estate tax, which snared estates exceeding $5.49 million last year but has completely disappeared. New Jersey, too, has ditched its estate tax altogether, after hiking its exemption to $2 million in 2017 from its notoriously low, longtime exemption of $675,000. That leaves 12 states (plus the District of Columbia) with state estate taxes on the books. And many of them are hiking exemptions for 2018, sparing more families from a tax bill when a loved one passes. Connecticut, for instance, raises its exemption by $600,000 for 2018, to $2.6 million, and Maryland is lifting its exemption to $4 million, up $1 million from last year. Generally, state estate tax rates are on a graduated scale, typically topping out at 16%. Estate taxes reduce what's left for heirs, of course, but in some states, those heirs get hit directly. While New Jersey eliminated its estate tax, the Garden State still taxes the transfer of assets to certain heirs, such as siblings. Five additional states still levy inheritance taxes: Iowa, Kentucky, Maryland, Nebraska and Pennsylvania. Advertisement Despite its nickname, the Free State, Maryland is now the lone state in the union to impose both estate and inheritance taxes. Washington, D.C., also impose both estate and inheritance taxes. States with Estate Taxes or Inheritances Taxes (or Both) Connecticut; estate tax only Hawaii; estate tax only Illinois; estate tax only Iowa; inheritance tax only Kentucky; inheritance tax only Maine; estate tax only Maryland; both Massachusetts; estate tax only Minnesota; estate tax only Nebraska; inheritance tax only New Jersey; inheritance tax only New York; estate tax only Oregon; estate tax only Pennsylvania; inheritance tax only Rhode Island; estate tax only Vermont; estate tax only Washington state; estate tax only Washington, D.C.; both If you live in one of the 17 states that levies a death tax, pay close attention to the rules of how the tax works. In New York, for example, taxable gifts made within three years of death can be added back to an estate when calculating the estate tax, and if the value of the estate is more than 105% of the current exemption (now $5.25 million), the exemption is extinguished and the entire estate is taxed. SEE ALSO: 33 States with No Estate Taxes or Inheritance Taxes With inheritance taxes, the relationship to the decedent can determine whether and how an heir is taxed. Inheritance tax may skip close relatives, such as children and grandchildren, which is the case in Iowa and Kentucky, for example. But Pennsylvania taxes lineal heirs at 4.5% on the transfer of assets from the decedent to the beneficiary, while that rate climbs to 12% if the assets are transferred to a sibling of the deceased. Read more about each state's tax rules at Kiplinger's State-by-State Guide to Taxes on Retirees. Will States Follow the New Federal Estate-Tax Exemption? A big question mark now is how states will handle the very generous new federal estate-tax exemption. Several states tie their exemption to the federal government's, while other states in the past few years have been gradually raising their exemption to eventually match the federal exemption. But the states that decided to follow Uncle Sam's lead in recent years, such as Maine, Maryland and New York, did so when the exemption was around a mere $5 million per person. Advertisement Will states follow the more generous $11.2 million per person federal exemption effective in 2018? The answer to that multimillion-dollar question is hazy. SEE ALSO: 9 States with No Income Tax Bruno Graziano, senior estate tax analyst for Wolters Kluwer Tax & Accounting, says he expects that state legislatures in affected states will gauge how costly it will be to state revenues to match Uncle Sam's generosity. "As time goes on, we'll see what the state reaction is," he says. Stay tuned.