What is the Inheritance Tax?

In Virginia, Inheritance Tax is a type of tax that applies when someone passes away and leaves an estate behind. It is sometimes called a “death tax,” since it is due upon death. The rate of the Inheritance Tax is based on the degree of relationship between the deceased and the inheritor. For example, a spouse would be taxed at a lower rate than for example, a distant relative. The rate for a spouse is 0%, while other relatives are taxed at a rate of 4% - 10%. Income from the Inheritance Tax is used by the Virginia government to fund its operations, though the taxes collected are calculated based on the total value of the estate, not the income or assets of the deceased. This means that even those with modest estates can be subject to Inheritance Tax. Inheritance Tax must be paid before any assets can be transferred to the inheritor. This includes stocks, bank accounts, real estate, and other assets. Failure to pay the Inheritance Tax can result in the assets being frozen until the tax is paid. Virginia also allows for exemptions and credits to the Inheritance Tax. This means that some individuals may be able to reduce their Inheritance Tax liability or have the tax waived entirely. The most common exemptions & credits include those for surviving spouses, adult children, charitable donations, and medical expenses.

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What is the Inheritance Tax?

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