How Much Tax on an Inherited IRA? A Lump Sum Against the 10-Year Spread, Federal and in Every State (2026)

Published 2026-10-28. Tax year 2026 (the return filed in early 2027).

How much tax will you pay on an inherited IRA in 2026, and does spreading it over ten years help?

For a single worker of 50 earning $75,000, a $300,000 inherited IRA taken in one 2026 lump sum adds $86,708 of federal income tax (28.9% of it); ten equal withdrawals add $66,000 (22.0%), at 2026 rates and dollars, saving $20,708. The state adds up to $30,026 on the lump sum (Oregon; median of the 41 taxing states $15,000), and spreading saves the most state tax in Maine ($22,629). 10 jurisdictions charged none of the three beneficiaries state tax on the inheritance (Alaska, Florida, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wyoming). In 18 taxing states spreading saved the single worker under 2% of the state tax (Arizona, Delaware, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Massachusetts, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Carolina, Ohio, Virginia, West Virginia): a flat rate, or brackets that top out below these incomes, does not reward the spread. At the other end, in Kentucky, Maine, Michigan the ten smaller withdrawals drew no state tax at all, because each fit under a yearly retirement-income exclusion those states extend to a beneficiary's distributions.

Your inherited IRA: the required withdrawals and deadlines under the 10-year rule
Free: whether yearly distributions are required, how much, and the last year to empty the account.

The three beneficiaries

Each inherits a traditional IRA from a parent and is not the spouse, so under the SECURE Act the account must be emptied by the end of the tenth year after the death (26 CFR 1.401(a)(9)-3: Death before required beginning date). The money can come out at any pace inside the window; this study prices the two ends: all of it in 2026, or ten equal withdrawals, each priced on the 2026 law and dollars (ten times the tax that one tenth adds to 2026). A beneficiary takes inherited money without the 10% additional tax at any age (Retirement topics - Exceptions to tax on early distributions). Couples' income is split evenly between the spouses.

The federal tax: lump sum against the spread

A lump sum stacks the whole inheritance on top of the beneficiary's own income and reaches higher brackets; the spread keeps each year's slice lower. For the retiree it also makes more Social Security taxable and sets an IRMAA surcharge on Medicare premiums two years later.

Where spreading saves the most, federal plus state

States with one flat rate tax a lump sum and a spread alike; graduated states reward the spread, most where the brackets run high. The largest state savings come where a yearly retirement-income exclusion covers a beneficiary's distributions: a lump sum uses one year's exclusion, ten withdrawals use ten. Each state's rules and official sources are on its state guide. To compare all 51 jurisdictions for your own income, use your retirement tax in every state.

Every state

Related: The 10-year rule year by year · Inherited IRA rules for 2026 · One tax year or two for a large withdrawal · Which states tax retirement income · Your retirement tax in every state

Download the data

Every case on this page, with its inputs: inherited-ira-tax-by-state-2026.csv (the 153 beneficiary-state cases) · inherited-ira-tax-by-state-2026.json (CC0, with the federal table). Dollar amounts in USD.

Questions

How much tax will I pay on an inherited IRA?

It is ordinary income, taxed at your own rates on top of your other income. For a single worker of 50 earning $75,000, a $300,000 inherited IRA taken at once in 2026 added $86,708 of federal tax, against $66,000 over ten equal withdrawals, plus up to $30,026 of state tax.

Is it better to take an inherited IRA as a lump sum or over 10 years?

For these beneficiaries the spread cost less: $20,708 less federal tax for the single worker, $28,429 for the couple and $28,507 for the retiree (who also avoided $6,355 of IRMAA). A year with unusually low income is the best year to take more.

Which states do not tax inherited IRAs?

For these three beneficiaries, 10 jurisdictions charged no state income tax on the inheritance: Alaska, Florida, New Hampshire, Nevada, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wyoming.

Does Pennsylvania tax inherited IRA distributions?

Not for these beneficiaries: the Pennsylvania tax the inheritance added was $0 for the worker of 50 and $0 for the retiree.

How much California tax is due on an inherited IRA?

For the single worker of 50, $27,979 on a $300,000 lump sum, or $27,110 over ten years; New York: $21,686 or $17,023.

Does Illinois tax an inherited IRA?

Illinois exempts retirement plan distributions. The $145 it added on the single worker's lump sum comes from the higher income, not from tax on the distribution: Illinois withdraws its personal exemption above an income limit.

Method and sources

Every figure was computed by QuantCalc's open tax engines (federal 2.5.1, state 1.21.2) through the household module the free state income tax calculator runs, then recomputed by the C engines behind the federal and state tax APIs from independently written requests, agreeing to the cent. The inheritance is a traditional IRA distribution received as a beneficiary (the federal return's death exception from the additional tax; the state engine's early-distribution rules read the same exception). Each state's rules and their official sources are documented in the state tax engine documentation; the federal sources:

• 26 CFR 1.401(a)(9)-3: Death before required beginning date
• 26 CFR 1.401(a)(9)-5: Required minimum distributions from defined contribution plans
• 26 U.S. Code § 72
• Retirement topics - Exceptions to tax on early distributions
• 26 U.S. Code § 86
• Publication 915, Social Security and Equivalent Railroad Retirement Benefits
• Rev. Proc. 2025-32: 2026 inflation-adjusted items (incl. One Big Beautiful Bill amendments)
• 2026 Medicare Parts A & B Premiums and Deductibles

What is not modelled

• The Indiana and Maryland figures include the county income tax every county there levies, on the state return, at a default county rate: Indiana at 1.75% (county rates); Maryland at 3.12% (county rates). A resident pays their own county's rate. Other local income taxes (city and school-district taxes, and county taxes in other states) are not included (see local income tax on retirement income).
• Every withdrawal is priced on the 2026 law and in 2026 dollars: no growth of the account, no inflation of the brackets, no change in the beneficiary's own income over the ten years. The year-by-year federal version, with growth, is the 10-year rule study.
• A beneficiary of an owner who had already started required distributions must also take a yearly minimum in years 1 to 9; the equal spread here takes more than that minimum.
• A traditional IRA without basis; an inherited Roth IRA is tax-free if the account was five years old.
• Couples' income and the inheritance are split evenly between the spouses; a state that caps an exclusion per person treats an uneven split differently.
• The IRMAA surcharge is priced on the 2026 tiers; a 2026 income sets the premiums paid in 2028.
• Income tax only: no state inheritance tax (a few states levy one on the heir, by relationship), no estate tax.

An estimate, not tax advice. These are computed examples for the 2026 tax year from QuantCalc's open tax engines (federal 2.5.1, state 1.21.2). Your own return depends on facts these examples do not include. Check any decision with your tax preparer before acting.

@misc{quantcalc2026inheritedirataxbystate2026alumpsumorteny,
  title  = {Inherited IRA Tax by State (2026): a Lump Sum or Ten Years of Withdrawals, Federal and All 51 Jurisdictions},
  author = {{QuantCalc Research}},
  year   = {2026},
  url    = {https://quantcalc.app/research/inherited-ira-tax-by-state-2026/},
  note   = {Accessed <date>}
}