The Pennsylvania Inheritance Tax applies to a decedent’s estate regardless of the size of the estate. The PA Inheritance Tax rate is based on the decedent’s relationship to the beneficiary. The rate for transfers of assets fromPA Inheritance Tax Return one spouse to another is 0%.
Transfers from parents to children and other lineal descendants are taxed at a rate of 4.5%. The rate for transfers between siblings is 12%, and the rate for transfers to nieces, nephews and other beneficiaries is 15%. Upon the death of a child age 21 or younger, there is no tax on assets that pass to that child’s parent or stepparent.
The rate of tax only applies to the net value of the estate. Debts, funeral expenses and other estate costs and expenses are deducted from the gross estate. In addition, a $3,500 family exemption may also be available as an additional deduction. Certain property is exempt from the tax altogether, including jointly owned property between spouses (although this is a technicality as the rate for transfers between spouses is 0). Life insurance proceeds are also exempt from Pennsylvania Inheritance Tax along with many retirement plans.
PA Inheritance Tax Return – Form REV-1500
The Pennsylvania Inheritance Tax form is the REV-1500. The REV-1500 must be filed within 9 months of the date of death unless an extension is granted. Late returns are subject to penalties and interest. Any extension granted by the PA Department of Revenue will avoid penalties, but interest continues to accrue. If an estimated tax payment is made within 3 months of the date of death, a discount of 5% will apply.
The Executor or Administrator of the decedent’s estate should carefully consider the following property and whether it is subject to PA Inheritance Tax:
- Inheritance Tax Rule for Joint Property
- Inheritance Tax & Life Insurance
- Inheritance Tax & Retirement Plans
- Future Interests
Pennsylvania Probate and Estate Administration Attorney
The Martin Law Firm is an experienced southeastern Pennsylvania probate and estate administration law practice. Our skilled probate attorneys assist executors and administrators with the PA probate and estate administration process, including the preparation and filing of the PA Inheritance Tax Return.
Executors and administrators should consider utilizing an experienced PA probate and estate administration attorney for preparing and filing the REV-1500 and for paying the PA Inheritance Tax on behalf of the estate. Contact an experienced PA estate administration attorney at The Martin Law Firm at 215-646-3980 for assistance with the PA Inheritance Tax Return.