PA Inheritance Tax: The Basics
What do you do when a loved one dies in Pennsylvania?
Most people are faced with this difficult issue at least once during their lifetime, but yet, very
few people really know what to do. Understandably, the topic is not exactly fodder for cocktail party discussion, like refinancing your home, or where to sign-up your son for the local little league. Because it isn’t widely discussed, most people are often surprised when they realize what is involved in the estate administration process.
So where do you turn, what are the steps, how long does it take, what is involved? The short
answer is that it varies greatly depending on the circumstances of each individual estate. This article is meant to offer a general, brief overview of the Pennsylvania inheritance tax and is not to be considered legal advice in any way. You should always seek the advice of a trusted attorney when administering or planning your own estate, as they will provide you with advice tailored to your unique situation.
Who must pay Pennsylvania Inheritance Tax?
Anyone who dies while a resident of Pennsylvania and owns anything of value, or anyone
who dies owning real property in Pennsylvania.
• Deceased PA Resident
• Deceased PA Real Property owner
What is Pennsylvania Inheritance Tax?
The Commonwealth of Pennsylvania exacts a tax on all items of value owned at the time of
death. These items are often collectively referred to as the decedent's "Estate." Estate assets can include cash, stocks, bonds, real estate, business interests, cars, jewelry, antiques, etc. (Note: the list of taxable assets is exhaustive and there are several exceptions.)
How much is Pennsylvania Inheritance Tax?
The good news (and there really hasn’t been much): if a spouse is inheriting the decedent’s
assets, there is currently no PA inheritance tax due. As for everyone else inheriting, PA Inheritance tax is currently calculated at three separate rates: 4.5% for lineal descendants (grandparents, parents, children and grandchildren) 12% for siblings and 15% for everyone else from nieces and nephews to complete strangers.
• 0% for spouses
• 4.5% for children and parents
• 12% for siblings
• 15% for everyone else
PA Inheritance Tax is NOT Estate Tax!
It is important to note that PA Inheritance tax should not be confused with federal estate tax,
which is commonly referred to as simply “estate tax.” Estate tax is a federal tax that is payable to the IRS depending upon the current government regulations and the value of a decedent’s estate. Unlike PA Inheritance tax, not everyone owes estate tax.
PA Inheritance Tax ≠ Federal Estate Tax
When is PA Inheritance Tax Due?
The PA inheritance tax return must be filed and taxes paid in full within nine (9) months of
the decedent’s death. (Extensions may be granted in certain circumstances.) In the event that the tax is late, the Commonwealth will charge penalties and interest.
APRIL L. CHARLESTON, ESQ
April focuses her practice on estate planning and administration. For additional information on this topic or contact information please visit www.charlestonfirm.com.