Estate and Inheritance Taxes

By pjain      Published Oct. 16, 2019, 5 a.m. in blog Fin-Plan-Strategy   

[TOC] * Part of Tax Series Tax Planning 101

Estate and Inheritance Taxes - Key Factors and Lessons

Federal Estate and Inheritance Taxes 101

  • Estate Taxes
  • 2019 only - exempt below $11.4 m indiv, $22.8 m married couple.

Estate taxes are paid by the estate and based on the estate's overall value

Inheritance taxes are paid by an individual heir on whatever property they inherit.

  • Federal Estate Taxes for 2019 only - exempt below $11.4 m indiv, $22.8 m married couple.

States trying to level between themselves

  • States have far lower limits and will take their pound of flesh, while Federal Estate Taxes for 2019 only are exempt below $11.4 m indiv, $22.8 m married couple.

  • A growing number of states are reducing or eliminating their death taxes to dissuade well-off retirees from moving to more tax-friendly jurisdictions, 12 states and the District of Columbia still impose an estate tax and six states have an inheritance tax on the books. (Maryland has both!)

Will YOUR retirement income or pension be taxed?

Taxes by Federal and Major States

X Iowa

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X Iowa

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

  • Inheritance Tax: No

  • Gift Tax -

X Illinois

  • Overall Illinois is the least taxpayer-friendly state in the country, you shouldn't be startled to hear that it has an estate tax.

  • WARNING: Illinois has a SEVERE pension problem that is forcing all taxes likely to be far higher in coming years to pay hellish pensions for state employees. While residents are fleeing its corrupt and high tax economy, the burden for those left behind is likely to intensify far more. After all, the governments like IL, CA, NJ, etc. HAVE to pay these from general tax funds!.

  • Estate Tax Exemption Level: $4 M, For higher Tax Rates: 0.6% - 16%

  • Inheritance Tax: No

  • Gift Tax -

X Hawaii

  • Estate Tax Exemption Level: $5.5 M, For higher Tax Rates: 10% - 15.7%

    starting in 2020, the highest rate creeps up to 20% for estates worth more than $10 m

  • Inheritance Tax: No

  • Gift Tax -

X Connecticut

  • Estate Tax Exemption Level: $3.6 M, For higher Tax Rates: 7.2% - 12%

  • Inheritance Tax: No

  • Gift Tax - Connecticut is the only state with a gift tax on assets you give away while you're alive. If you made taxable gifts during the year, state law requires that you file a Connecticut gift tax return to identify such gifts. However, taxes (at rates ranging from 7.8% to 12%) are due only when the aggregate value of gifts made since 2005 exceeds $3.6 million.


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