What is estate tax?

Estate tax is a form of taxation that is imposed on an individual’s wealth or estate when they pass away. In Pennsylvania, the estate tax is separate from the federal estate tax, and applies to the estates of residents of the state. The Pennsylvania estate tax is calculated on the net value of all of the assets owned by the deceased, minus any debts or funeral expenses that need to be paid. This includes any life insurance policy, real estate, stocks, bonds, jewelry, collectables, and other assets owned by the deceased. The amount of liability the estate owes is based on the taxable estate size, and the estate’s tax rate increases as the value of the estate increases. In Pennsylvania, the estate tax rate can range from four to sixteen percent depending on the size of the estate. The first million dollars of taxable estate value is exempt from taxation, and the amount rises each year with inflation. Any estate that has a taxable value of more than $3.5 million is subject to a flat rate of 16%. The proceeds of the estate tax are collected by the Pennsylvania Department of Revenue and used to fund various state programs. In addition, Pennsylvania residents that are subject to estate tax may be eligible for various estate tax credits or deductions. Each situation is unique, so it is best to consult a qualified attorney or accountant to discuss the specific details of the case.

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