Currently the District of Columbia and only a handful of states collect a state estate tax, the six states listed below collect a state inheritance tax, and two states collect both – Maryland and New Jersey.
Inheritance Taxes vs. Estate Taxes
So what’s the difference between an inheritance tax and an estate tax? While at first glance it may appear to just be semantics since both types of taxes are collected as the result of someone’s death, an inheritance tax is definitely not the same as an estate state. An inheritance tax is based on who receives a deceased person’s property and how the beneficiary is related to the deceased person, while an estate tax is based on the value of the deceased person’s estate and not on who gets what.
Push to Repeal State Death Taxes
Lately both state estate taxes and state inheritance taxes have been on the chopping block: Ohio’s estate tax has been repealed effective January 1, 2013, Tennessee’s estate tax will be repealed effective January 1, 2016, and Indiana’s inheritance tax, which was supposed to be phased out by January 1, 2022, has ended up being retroactivelyrepealed to January 1, 2013.
During 2012 initiatives were floated to repeal Nebraska’s inheritance tax and North Carolina’s estate tax, but nothing happened on those fronts; however, in 2013 a new initiative is underway to repeal North Carolina’s estate tax. On November 6, 2012, Ballot Measure 84, which would have repealed Oregon’s estate tax by January 1, 2016, was defeated by a margin of 54% in favor of keeping the estate tax vs. 46% in favor of getting rid of it.
Below is a chart that summarizes the details of the current laws that govern inheritance taxes in the six states that collect them.
*With regard to life insurance, in general life insurance that is payable to a livingbeneficiary is not included, but life insurance that is payable to the deceased person or the deceased person’s estate is included.
Read the rest of the article here: http://ow.ly/ON1rR