On behalf of Silver Tax Group posted in Tax Law on Monday, November 6, 2017.
The federal estate tax exemption has hovered near $5.5 million (almost $11 million per couple) for years. If an estate that cross this threshold, the federal tax rate is 40 percent. This does mean that all states follow the same approach. Currently, there are 15 states and the District of Columbia that assess an estate tax and six have an inheritance tax.
Tax regarding inheritance
Do you own a family business or a vacation home on one the great lakes or in the mountains? You need to consider the tax consequences that will come with any transfer to the next generation. And it is not simply federal taxes.
State Estate Taxes
The threshold that triggers a state estate tax assessment varies from about $1 million in Oregon to the Hawaii and Delaware that match the federal exemption. The tax rate varies even more widely from less than a percent to 20 percent as a top bracket in Washington State.
State legislation is constantly changing. For example, in Tennessee, the estate tax was phased out in 2016 and New Jersey will phase it out by 2018. Several states and the District of Columbia have also considered or have raised their exemption amounts.
How do inheritance taxes vary from estate taxes? These taxes vary based on the relationship to the person who passes away. For example, a New Jersey spouse or child receives a gift that is exempt from inheritance tax. A brother or sister receiving a gift over $25,000 would pay a graduated inheritance tax.