Pennsylvania started off 2020 by lowering the tax imposed on a class of beneficiaries who inherit from their parents to 0%. To be taxed at 0%, the parent who is deceased must have had a child who was under 21 at the date of death. If the child is over 21 on the date of death, the child or the estate will remain responsible for a 4.5% inheritance tax.

This change affects any decedent who died after December 31, 2019. This does not include grandparents or step-grandparents, but should include all step-parents.

This is similar to 0% tax imposed on spouses in Pennsylvania which has been in effect since January 1995. While spouses and children are not exempt from tax, the 0% tax rate effectively eliminates the burden on the beneficiary at least for inheritance tax reasons.

There are only six states which still collect inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania.

Each beneficiary of a Pennsylvania decedent will have a tax imposed on them according to their consanguinity or legal relationship to the decedent at the time of death. Inheritance tax is due nine months after a decedent passes in Pennsylvania and a 5% discount is permitted if paid within three months of death.

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