Pennsylvania Inheritance Taxes
Inheritance taxes are often paid off the top by the estate before beneficiaries receive assets from the estate. Deductions from the gross estate are allowed for certain estate administrative costs, family exemptions and expenses prior to determining the PA inheritance tax due. Pennsylvania has no exemption amount and the tax is applied on the first eligible dollar of the net probate estate. The tax is calculated based on the value of a decedent’s estate received by each beneficiary and that beneficiary’s relationship to the decedent.
While life insurance proceeds are not subject to the PA inheritance tax, it is important to remember that the inheritance tax is applied to both probate and non-probate assets.
Property owned jointly between spouses is exempt from inheritance tax. Property owned jointly with any other person is taxed at the above rates depending on the relationship between the co-owners multiplied by ½ the value of property to reflect the decedent’s interest that is being passed to the surviving joint owner.
If an Inheritance tax payment is made within 90 days of the individual’s death, there is a 5% discount on the inheritance tax owed. The final tax return and payment is due nine months after the individual’s death.