What States Collect Inheritance Tax: An Overview
Inheritance tax, also known as estate tax, is a tax imposed on the transfer of an individual’s estate to their heirs after their death. While the federal government collects inheritance tax at the national level, the state governments also have the authority to impose their own inheritance tax regulations. This article provides an overview of the states that collect inheritance tax and the key aspects of their tax laws.
States That Collect Inheritance Tax
As of 2021, only a few states in the United States collect inheritance tax. These states are:
1. Iowa
2. Kentucky
3. Maryland
4. New Jersey
5. Pennsylvania
6. Tennessee
7. Virginia
These states have their own set of rules and regulations regarding the inheritance tax, which can vary significantly from one state to another.
Iowa
Iowa is one of the few states that impose an inheritance tax on both residents and non-residents. The tax rate ranges from 3.5% to 15%, depending on the relationship between the heir and the deceased. Iowa’s inheritance tax is due within nine months of the decedent’s death.
Kentucky
Kentucky also collects inheritance tax from both residents and non-residents. The tax rate is progressive, ranging from 4% to 30%, depending on the relationship between the heir and the deceased. Kentucky requires the inheritance tax return to be filed within nine months of the decedent’s death.
Maryland
Maryland levies an inheritance tax on residents and non-residents who inherit property located in the state. The tax rate varies from 10% to 16%, depending on the relationship between the heir and the deceased. The inheritance tax return must be filed within nine months of the decedent’s death.
New Jersey
New Jersey imposes an inheritance tax on residents and non-residents who inherit property located in the state. The tax rate ranges from 0.5% to 16%, depending on the relationship between the heir and the deceased. The inheritance tax return must be filed within nine months of the decedent’s death.
Pennsylvania
Pennsylvania collects inheritance tax from residents and non-residents who inherit property located in the state. The tax rate varies from 0% to 15%, depending on the relationship between the heir and the deceased. The inheritance tax return must be filed within nine months of the decedent’s death.
Tennessee
Tennessee levies an inheritance tax on residents and non-residents who inherit property located in the state. The tax rate ranges from 0% to 16%, depending on the relationship between the heir and the deceased. The inheritance tax return must be filed within nine months of the decedent’s death.
Virginia
Virginia collects inheritance tax from residents and non-residents who inherit property located in the state. The tax rate varies from 0% to 16%, depending on the relationship between the heir and the deceased. The inheritance tax return must be filed within nine months of the decedent’s death.
Conclusion
Understanding the states that collect inheritance tax is crucial for individuals and estate planners to ensure compliance with state tax laws. While only a few states impose inheritance tax, it is essential to be aware of the tax rates, exemptions, and filing deadlines to avoid potential penalties and interest. Consulting with a tax professional or attorney can provide further guidance on navigating the complexities of inheritance tax in each state.
