Pennsylvania has just reduced the tax on the estates of people dying after July 1, 2000.
The tax on the value of an estate (after subtracting debts of the decedent and expenses of administration of the estate) have been reduced in two categories:
property passing to lineal descendants (children, grandchildren, great grandchildren, etc.) will now be taxed at 4.5% of its value (reduced from 6%); and
property passing to siblings will now be taxed at 12% of its value (reduced from 15%).
Other rates remain unchanged. Gifts to lineal ancestors (parents or grandparents) will continue to be taxed at 6%, and gifts to anyone not a lineal descendant, lineal ancestor, or sibling will continue to be taxed at 15%.
And how about Congress! In what would be extraordinarily dramatic if accomplished, the House of Representatives has voted to abolish altogether the federal estate tax whose rates start at 37% and rise to 55%; of course since each of us has a $675,000 exemption (which is scheduled to rise gradually to $1,000,000 in 2006), something like 98% of the estates of all decedents pay no federal estate taxes. It is highly unlikely that estate taxes will be eliminated totally, but it seems likely that as a compromise the personal exemption will be increased from its present $675,000 to somewhere between $2,000,000 to $5,000,000. Keep your eye on it.
– Ken Butera