The transformation of M2M intercommunication ecosystem, IoT devices play a predominant role by operating in a way similar to how we humans communicate reciprocally. Smart Grid is the digital form of traditional electric grid. The infrastructure and wiring of traditional electric grid(s) is obsolete and requires considerable investments to improve the grid conditions which is a time-consuming process. Moreover the components of these grids require constant maintenance and surveillance to make sure the power supply is continuous. The innovation of smart grid (SG) technology allows the amalgamation of sustainable energy and environmental considerations. The integration of IoT into the complex architecture of energy systems facilitates the transformation of traditional electric grids into efficient smart grids. With the integration of IoT in smart grids, the cost and reliability of grids is improved. This research work puts forward an unprecedented framework that enables optimized energy management of IoT devices in a smart grid by considering the real-time grid conditions and adjusting the energy consumption based on the current need of each IoT device. The proposed framework addresses the switching mode of three operational states of an IoT device (Active, Idle, and Sleep) to increase the grid stability by effective energy management.