The requirement to pay Pennsylvania inheritance tax depends on the type of assets held at the time of death and how your loved one's assets were held at that time. The value reported is the value as of the Decedent's date of death (not the amount received). The lists below itemize which assets are and are not subject to Pennsylvania inheritance tax.
Which assets are subject to PA inheritance tax?
Cash
Real estate
Automobiles
Personal effects such as furniture, antiques, jewelry, etc.
Stocks
Bonds
Bank accounts
Closely-held business interests, rents, etc.
Joint-owned property (except between spouses), including jointly-held convenience accounts
Retirement and investment accounts, including those passing directly to beneficiaries (except when an IRA owner is under 59 1/2 at the time of death)
Gifts made within 1 year of the Decedent's death (less a $3,000.00 exemption per person)
Assets held in a revocable living trust (some exceptions)
Which assets are exempt from PA inheritance tax?
Property held between spouses
Life insurance proceeds (regardless of whether paid to estate or beneficiaries)
Certain farm land and other agricultural property
Property inherited by a parent from a child under age 21
Property inherited by a child under age 21 from a parent
What are the tax rates?
PA inheritance tax rates are determined based on the relationship between the Decedent and the beneficiary.
0% - Spouse
4.5% Child, Grandchild, Step-Child/Grandchild, and Parent
12% - Sibling and Sibling-in-law
15% - All other relationships, such as niece/nephew, aunt/uncle, friend, neighbor, boyfriend/girlfriend, etc.
Charitable organizations and certain institutions are fully exempt from the tax.
Bonus tip: Upon the death of a loved one, you may receive a notice from the Pennsylvania Department of Revenue notifying you that tax is due. Before paying inheritance tax, it is best to consult with your estate attorney to be sure the information on the notice is correct.
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