Step-Up in Basis
Inherited assets are usually revalued to their date-of-death worth, which can erase built-up capital gains tax.
What Step-Up in Basis means in an estate
Under federal tax law, the cost basis of most inherited assets resets to fair market value on the date of death. An heir who sells soon afterward often owes little or no capital gains tax, even on an asset the person held for decades. This is a federal rule, and it is why a good date-of-death valuation matters even for estates far too small to owe any estate tax. It does not reach every asset: retirement accounts are the notable exception.
How this works in your state
The concept is national, but the forms, procedure names, thresholds, and filing practice vary by state. Open your state glossary and guides to see how step-up in basis is handled where the estate is being settled.
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Information current as of April 4, 2026
Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in your state can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.