How much is inheritance tax in Minnesota? This is a question that often comes to the minds of individuals who are either planning to leave an inheritance or are considering the possibility of inheriting assets. Inheritance tax, also known as estate tax, is a tax imposed on the transfer of property from a deceased person to their heirs. Minnesota, like many other states in the United States, has its own set of rules and rates when it comes to inheritance tax. Understanding these rates is crucial for both the giver and the receiver of an inheritance.
In Minnesota, inheritance tax is levied on the fair market value of the property received by the heir. The tax rate varies depending on the relationship between the deceased and the heir. The state does not tax inheritances from surviving spouses, parents, children, or grandchildren. However, inheritances from other relatives, such as siblings, aunts, uncles, or cousins, are subject to tax.
For inheritances from non-relatives, the tax rate is progressive, meaning that the rate increases as the value of the inheritance increases. The current rates for non-relatives are as follows:
– Inheritances valued at $1 to $10,000 are taxed at a rate of 6%.
– Inheritances valued at $10,001 to $20,000 are taxed at a rate of 8%.
– Inheritances valued at $20,001 to $30,000 are taxed at a rate of 10%.
– Inheritances valued at $30,001 to $40,000 are taxed at a rate of 12%.
– Inheritances valued at $40,001 to $50,000 are taxed at a rate of 14%.
– Inheritances valued at $50,001 to $75,000 are taxed at a rate of 16%.
– Inheritances valued at $75,001 to $100,000 are taxed at a rate of 18%.
– Inheritances valued at $100,001 and above are taxed at a rate of 20%.
It’s important to note that Minnesota does not have a state estate tax. This means that the value of the deceased person’s estate, which is the total value of their assets at the time of death, is not subject to tax at the state level. However, the inheritance tax on the transferred assets is still applicable.
Understanding the inheritance tax in Minnesota can help individuals make informed decisions about estate planning and inheritance. It’s advisable to consult with a tax professional or an estate planning attorney to ensure that all legal and tax obligations are met when transferring assets upon death. By doing so, both the giver and the receiver can navigate the inheritance process with confidence and clarity.
