Pennsylvania Inheritance Tax

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What Is Pennsylvania's Inheritance Tax?

Pennsylvania imposes an inheritance tax on persons who inherit property from persons who are not closely related to them. The tax rate is dependent on their familial relationship. However, some exceptions may apply.

Inheritance tax is collected when the deceased is either:

Exemptions for Farms and Businesses

Pennsylvania does have special exemptions for farms and businesses. To use the tax exemption for farmland, the farm must:
To use the tax exemption for small businesses, the business must:

Tax Rates

Pennsylvania has 4 tax rates based upon the inheritor’s relationship with the decedent.
No tax – There are a select few who do not have to pay inheritance tax. Those include:
4.5% - Pennsylvania carved out a Class A group of people who pays a 4.5% tax rate. Relative to the decedent, those people include:
12% - Siblings of the decedent pay a 12% tax rate. This applies irrespective of whether the sibling is adopted or half-blood.

15% - All other inheritors pay a 15% tax rate.

When Is Tax Collected?

The executor of the estate must file a tax return for the decedent within 9 months of his death. Only one tax return is needed even if there are multiple people inheriting. The tax must be paid out of the decedent’s estate prior to distribution of the estate. If the tax is not filed within the 9 months deadline, then an extension may be filed and a penalty will be assessed.

Consulting an Attorney

If you are concerned with inheritance tax or would like to potentially reduce the amount owed, please consult an estate lawyer. He will help you straighten out your affairs for your peace of mind and to lower your beneficiaries’ tax obligations.

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Last Modified: 06-22-2015 08:57 PM PDT

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