Bill Would Phase Out 'Death Tax'
Senator Richard Alloway II (R-33) introduced legislation today that would completely phase out Pennsylvania's inheritance tax by 2017.
Senate Bill 80 would phase out the inheritance tax for direct descendants by 2012, for siblings by 2015, and for other heirs by 2017. Under current law, an estate is subject to a tax of 4.5 percent for direct descendants, 12 percent for siblings and 15 percent for other heirs.
"If someone pays taxes on their earnings and makes sacrifices to provide for their family's future, it is unconscionable for the state to take another bite out of that hard-earned money they intended for their family when they pass away," Alloway said. "The vast majority of states do not impose an inheritance tax, and I hope that Pennsylvania will soon join these states in refusing to profit from someone's death."
Under Alloway's legislation, the death tax would drop from 4.5 percent to 2.5 percent in 2010, .5 percent in 2011 and be eliminated in 2012 for direct descendants. For siblings, the rate would drop 2 percent per year before being eliminated in 2015.
The tax for other heirs would be reduced to 13 percent in 2010, 11 percent in 2011, 9 percent in 2012, 7 percent in 2013, 5 percent in 2014, 3 percent in 2015 and 1 percent in 2016 before being completely phased out in 2017.
There is no state inheritance tax charged for a transfer of property between spouses.
Senate Bill 80 would phase out the inheritance tax for direct descendants by 2012, for siblings by 2015, and for other heirs by 2017. Under current law, an estate is subject to a tax of 4.5 percent for direct descendants, 12 percent for siblings and 15 percent for other heirs.
"If someone pays taxes on their earnings and makes sacrifices to provide for their family's future, it is unconscionable for the state to take another bite out of that hard-earned money they intended for their family when they pass away," Alloway said. "The vast majority of states do not impose an inheritance tax, and I hope that Pennsylvania will soon join these states in refusing to profit from someone's death."
Under Alloway's legislation, the death tax would drop from 4.5 percent to 2.5 percent in 2010, .5 percent in 2011 and be eliminated in 2012 for direct descendants. For siblings, the rate would drop 2 percent per year before being eliminated in 2015.
The tax for other heirs would be reduced to 13 percent in 2010, 11 percent in 2011, 9 percent in 2012, 7 percent in 2013, 5 percent in 2014, 3 percent in 2015 and 1 percent in 2016 before being completely phased out in 2017.
There is no state inheritance tax charged for a transfer of property between spouses.
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