Inheritance Tax
The tax rate for Pennsylvania Inheritance Tax is 4.5 percent (4.5%) for direct descendants (lineal heirs), transfer for siblings 12 percent (12%) and 15 percent (15%) for other heirs (except charitable organizations, exempt institutions, and government entities which are exempt from tax). Property owned jointly between husband and wife is exempt from Inheritance Tax. Certain property inherited from a spouse is taxed at a rate of 0 percent (0%). Contact our office for further clarification.
Inheritance Tax returns are due nine calendar months (9 months) after a person's death. If no executor or administrator is named, and property or transfers exit, then the person receiving the property is required to file a return and pay the tax.
There is a five percent (5%) discount of the tax when payment is made within three (3) months of the date of death.
All real property and all tangible personal property located in Pennsylvania are taxable. This includes but is not limited to:
- Cash
- Automobiles
- Furniture
- Antiques
- Jewelry, etc.
All intangible property is taxable regardless of where it is located. This includes:
- Stocks
- Bonds
- Bank accounts
- Loans receivable, etc.
Jointly-owned property, except between husband and wife with right of survivorship, is taxable. This includes but is not limited to:
- Real estate
- Securities
- Bank accounts, etc.
Joint property is taxable even though the decedent's name was added as a matter of convenience.
Remember, property owned jointly between husband and wife is exempt from Inheritance Tax, and property inherited from a spouse is taxed at a rate of 0 percent. There is a five-percent (5%) discount of the taxes when payment is made within three (3) months of the date of death.
In the case of joint bank accounts (JBA's), the joint bank account tax return is sent out by The Commonwealth of Pennsylvania.
If you haven't received a joint bank account tax form from the Commonwealth within two (2) months of the date of death, contact your bank. You will need the bank account number, the date the account was established, and the amount in the bank account at the time of death. Bring all this information to the Register of Wills and we will calculate for you the tax amount due.
Paid funeral expenses and bills of the decedent can be deducted from the amount subject to tax including the unsatisfied liabilities, cost of administration, attorney fees, fiduciary fees, and burial expenses including the cost of a burial lot, tombstone or grave marker and other related burial expenses are deductible.
In a jointly owned account, when two people have equal access and one dies, the survivor is taxed on one half of the amount (50%) in the account. If the bank account was established less than a year before the death of one of the individuals, then the amount in the account at the time of death is one hundred percent (100%) taxable.
The Inheritance Tax return is to be filed in duplicate with the Register of Wills in the county where the decedent was a resident. There is a filing fee of $10.00 to file the return. If an estate was raised, an additional feel on letters may need to be paid when filing the return.