Bitcoin Inheritance Tax Calculator by Jurisdiction

Estate and Inheritance Tax on Bitcoin Holdings

Bitcoin inherited by heirs is subject to estate or inheritance tax in most major jurisdictions. The IRS treats cryptocurrency as property under Notice 2014-21, meaning it follows the same estate tax rules as stocks, real estate, and other capital assets. The tax liability depends on three factors: the total estate value, the jurisdiction of the decedent, and the relationship between the decedent and the heir.

The following table summarizes estate and inheritance tax thresholds across major jurisdictions. Values above the exemption threshold are taxed at the listed top rate.

For a broader view of crypto tax obligations beyond inheritance, see the crypto tax calculator and the crypto tax rules by country reference.

US Federal Estate Tax: The $15 Million Exemption

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently set the federal estate and gift tax exemption at $15,000,000 per individual ($30,000,000 per married couple) effective January 1, 2026. This replaced the temporary TCJA exemption of $13,990,000 (2025) and eliminated the scheduled sunset that would have cut the exemption roughly in half. The $15M threshold is indexed for inflation starting in 2027.

The federal estate tax rate schedule is graduated from 18% to 40%, but because the unified credit wipes out all tax below the exemption threshold, every dollar above $15M is effectively taxed at a flat 40%. For a Bitcoin holder whose estate exceeds the exemption, the math is straightforward: (estate value - $15,000,000) x 0.40.

The unlimited marital deduction allows any amount to pass to a US citizen spouse estate-tax-free. Non-citizen spouses do not qualify and must use a Qualified Domestic Trust (QDOT). Surviving spouses can also inherit the deceased spouse's unused exclusion (portability), but only if IRS Form 706 is filed, even when no tax is owed.

US State Estate and Inheritance Taxes

Twelve states plus the District of Columbia levy their own estate taxes, and five states impose inheritance taxes. Maryland imposes both. State exemptions are often far lower than the federal threshold, meaning a Bitcoin holder whose estate falls below $15M federally may still owe state-level tax.

Oregon has the lowest state estate tax exemption at $1,000,000. Washington State has the highest top rate at 35%. Pennsylvania has no exemption threshold for inheritance tax: the 4.5% rate on direct descendants applies from dollar one, with a 5% discount for payment within three months. Iowa eliminated its inheritance tax effective January 1, 2025.

Stepped-Up Cost Basis: How Inherited Bitcoin Is Taxed

Under IRC Section 1014, inherited property receives a cost basis equal to its fair market value (FMV) at the date of death. Because the IRS classifies cryptocurrency as property, inherited Bitcoin qualifies for this step-up. This is one of the most significant tax advantages of inheritance over gifting.

If the decedent purchased 10 BTC at $5,000 each ($50,000 total cost basis) and BTC is worth $100,000 at the date of death, the heir's new cost basis is $1,000,000. If the heir sells immediately, they owe zero capital gains tax. Without the step-up, the heir would face capital gains on $950,000 of appreciation.

Gifted vs. inherited crypto: Gifts use carryover basis (the donor's original cost basis transfers to the recipient). Inheritance uses stepped-up basis (reset to FMV at death). For long-held, highly appreciated Bitcoin, inheritance is dramatically more tax-efficient for the recipient.

An alternate valuation date (six months after death) may be elected if it reduces the total estate value. This can be strategically useful when Bitcoin price drops between the date of death and the filing of Form 706. Crypto held in retirement accounts (IRA, 401(k)) does not receive a step-up.

UK Inheritance Tax on Bitcoin

HMRC treats cryptocurrency as property subject to inheritance tax (IHT) at market value on the date of death. The nil-rate band is GBP 325,000 per individual, frozen at this level through at least 2027/28. An additional residence nil-rate band (RNRB) of GBP 175,000 applies when the main home passes to direct descendants, bringing the effective individual threshold to GBP 500,000.

Both bands are transferable between spouses, so a married couple can pass up to GBP 1,000,000 before IHT applies. The rate is 40% on everything above the threshold, reduced to 36% if at least 10% of the net estate goes to charity. Gifts made within seven years of death may be clawed back into the estate under taper relief rules.

EU Inheritance Tax by Country

Inheritance tax varies dramatically across EU member states. Italy and Spain (in most autonomous communities) impose minimal taxes on close family members, while France can tax inherited crypto at up to 45% for children and 60% for unrelated heirs.

Germany

Germany exempts EUR 500,000 for spouses and EUR 400,000 per child. Tax Class I (close family) rates range from 7% to 30% depending on the taxable amount. Tax Class III (unrelated persons) faces rates from 30% to 50% with only a EUR 20,000 exemption.

France

Spouses and PACS partners are completely exempt. Children receive a EUR 100,000 allowance per parent, with rates from 5% to 45% on the excess. Unrelated heirs face a flat 60% rate with only a EUR 1,594 allowance.

Italy

Italy has one of the lowest inheritance tax burdens in Europe: 4% for spouses and children with a EUR 1,000,000 exemption per beneficiary. Siblings pay 6% with a EUR 100,000 exemption. Unrelated heirs pay 8% with no exemption. Legislative Decree 139/2024 separated lifetime gift and inheritance thresholds, effectively allowing up to EUR 2,000,000 tax-free per qualifying beneficiary.

Spain

Spain's state-level rates range from 7.65% to 34%, but autonomous communities set their own rules. Madrid, Andalusia, and Valencia effectively impose 0% on close family through rebates and allowances. The actual tax burden depends entirely on which community the decedent resided in.

Netherlands

Partners receive a EUR 795,156 exemption with rates of 10%-20%. Children receive only EUR 25,187 and pay 10%-20%. Unrelated heirs face 30%-40% above a EUR 2,658 threshold.

Japan: The Highest Rates

Japan imposes a base exemption of JPY 30,000,000 plus JPY 6,000,000 per statutory heir. Rates are graduated from 10% to 55%, making Japan the jurisdiction with the highest top inheritance tax rate among major economies. The spousal credit exempts amounts up to the greater of the statutory share or JPY 160,000,000.

Countries with No Inheritance Tax

Several major jurisdictions impose no inheritance tax: Australia (abolished 1979-1984), Canada, Singapore (abolished 2008), New Zealand, and Hong Kong. However, Canada imposes a deemed disposition at death, treating the decedent as having sold all assets at FMV. Capital gains are taxed at a 50% inclusion rate (2025-2026), effectively creating a tax event even without a formal inheritance tax.

Crypto-Specific Estate Planning Considerations

Bitcoin introduces unique challenges to estate planning that traditional assets do not. The self-custodial nature of Bitcoin means that without proper documentation, heirs may never be able to access inherited holdings. Chainalysis estimates that 17%-23% of all Bitcoin is permanently lost, largely due to lost keys and death without continuity planning.

Key documentation requirements for heirs:

• Location and access instructions for hardware wallets or cold storage devices
• Seed phrase backup locations (never store digitally without encryption)
• List of exchange accounts with login credentials stored in a password manager accessible to the executor
• Explicit fiduciary authority over digital assets granted in wills, trusts, and powers of attorney
• Instructions for any multisig or dead man switch configurations

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has been adopted by 46 US states plus D.C., providing a legal framework for fiduciary access to cryptocurrency. Without RUFADAA authorization and explicit instructions, executors may lack the legal standing to access or transfer crypto held in self-custody.

For a comprehensive comparison of inheritance-specific tools, see the Bitcoin inheritance solutions comparison. For a deeper discussion of planning strategies, see the Bitcoin inheritance planning guide.

Strategies to Minimize Estate Tax on Bitcoin

Several established estate planning strategies apply to cryptocurrency holdings:

• Annual gift exclusion: $19,000 per recipient (2025-2026); married couples can gift-split to $38,000. Gifted crypto uses carryover basis, not stepped-up basis.
• Irrevocable trusts: remove Bitcoin from the taxable estate, but beneficiaries receive carryover basis rather than stepped-up basis. The trustee must have full authority and ownership for the transfer to count as a completed gift.
• Spousal Lifetime Access Trust (SLAT): an irrevocable trust variant where the spouse is a beneficiary. Future appreciation is excluded from the estate while maintaining indirect access.
• Grantor Retained Annuity Trust (GRAT): the grantor retains an annuity for a set term, and any appreciation beyond the IRS hurdle rate passes to heirs tax-free. Effective for volatile assets like Bitcoin.
• Charitable remainder trust: provides an income stream during the grantor's lifetime, with the remainder going to charity. Avoids capital gains tax on contributed crypto.

Proper key management is critical regardless of which strategy is used. An irrevocable trust holding Bitcoin requires the trustee to control the private keys, which introduces operational complexity around cold storage, key rotation, and custodial security. For Bitcoin held on Spark or other Layer 2 protocols, the same estate planning principles apply: heirs need documented access to the wallet and any associated signing keys.

Frequently Asked Questions

Does inherited Bitcoin get a stepped-up cost basis?

Yes. Under IRC Section 1014, inherited cryptocurrency receives a cost basis equal to fair market value at the date of death. This eliminates capital gains tax on all appreciation that occurred during the decedent's lifetime. The step-up applies regardless of whether the Bitcoin was held on an exchange, in a hardware wallet, or in cold storage. Crypto in retirement accounts (IRA, 401(k)) does not qualify for the step-up.

How much Bitcoin can you inherit tax-free in the US?

Under the OBBBA (effective 2026), the federal estate tax exemption is $15,000,000 per individual. A married couple can shelter up to $30,000,000 using portability. Amounts above the exemption are taxed at 40%. However, state-level taxes may apply at much lower thresholds: Oregon's estate tax starts at $1,000,000 and Massachusetts at $2,000,000.

Is gifting Bitcoin to heirs better than leaving it in the estate?

It depends on the estate size and cost basis. Gifted crypto uses carryover basis (the donor's original purchase price), while inherited crypto gets stepped-up basis (FMV at death). For highly appreciated Bitcoin, inheritance is more tax-efficient for the recipient because it eliminates the capital gains tax liability. However, if the estate exceeds the $15M exemption, gifting during life can remove future appreciation from the taxable estate.

What happens to Bitcoin if someone dies without a will?

Without a will, Bitcoin passes under the state's intestacy laws, typically to the spouse and children. The larger problem is access: if the decedent held Bitcoin in self-custody without documented key access instructions, the heirs may never be able to recover the funds. Exchange-held crypto is easier to recover through probate, as the estate executor can contact the exchange with a death certificate and court order.

Do UK residents pay inheritance tax on Bitcoin?

Yes. HMRC treats cryptocurrency as property subject to inheritance tax. Estates above the GBP 325,000 nil-rate band (or GBP 500,000 including the residence nil-rate band) are taxed at 40%. Both bands are transferable between spouses, so a surviving spouse can use up to GBP 1,000,000 in combined allowances. Crypto must be valued at market price on the date of death.

Which country has the lowest inheritance tax for Bitcoin?

Australia, Singapore, Canada (no formal inheritance tax), New Zealand, and Hong Kong impose no inheritance tax. Within the EU, Italy is the most favorable for close family members: 4% with a EUR 1,000,000 exemption per child. Spain varies by region, with Madrid, Andalusia, and Valencia effectively imposing 0% on close family. Canada does impose deemed disposition capital gains at death, so it is not entirely tax-free.

How do I report inherited cryptocurrency to the IRS?

The estate executor files IRS Form 706 (Estate Tax Return) if the gross estate exceeds the filing threshold. The heir reports the inherited crypto at the stepped-up cost basis when they eventually sell. Starting in 2025, crypto gains and losses must be calculated on a wallet-by-wallet basis per Revenue Procedure 2024-28. Exchanges will issue Form 1099-DA for transactions on their platforms, but self-custodied assets require manual tracking.

This tool is for informational purposes only and does not constitute financial, legal, or tax advice. Tax laws change frequently, and the data presented reflects publicly available information as of mid-2025. Exemption thresholds, rates, and rules vary by jurisdiction and individual circumstances. Consult a qualified estate planning attorney and tax professional before making inheritance or estate planning decisions.