We will be re-introducing legislation (prior session HB 136) that will eliminate the Pennsylvania Inheritance Tax by removing Article XXI from the Tax Reform Code.

Currently, the Pennsylvania inheritance tax is imposed as a percentage of the value of a decedent’s estate transferred to beneficiaries by will, heirs by intestacy and transferees by operation of law. The tax rate depends on the relationship of the heir to the decedent.

The rates for Pennsylvania inheritance tax are as follows:
-0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
-4.5 percent on transfers to direct descendants and lineal heirs;
-12 percent on transfers to siblings; and
-15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.

The Federal inheritance/estate tax is applied to the transfer of property to an heir after the passing away of the original owner. Federal tax is calculated based on the fair market value of the property transferred to the beneficiary of the estate. However, unlike Pennsylvania, the federal estate tax has a general exclusion amount. Under the Tax Cut and Jobs Act (TCJA), the filing threshold was increased to $11,580,000 in 2020, and $11,700,000 in 2021 and is adjusted for inflation thereafter through 2025. FOR 2023, THE EXCLUSION AMOUNT WAS INCREASED TO $12.92 MILLION.

The elimination of this tax at the state level will protect against double taxation, ensure that inheritance goes to the family or heirs it was meant to go to and help preserve individuals who receive an inheritance from ending up with a tax bill at a time when they are also mourning the loss of their loved one.

Please join us in co-sponsoring this important legislation.

Statutes/Laws affected:
Printer's No. 1589 (May 05, 2025): P.L.6, No.2