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| STATE DEATH TAXES Every state benefits from taxable estates. About two-thirds of the states have a pick-up tax law. By virtue of these pick-up taxes, a state can enjoy participation in the federal estate tax. Using this tax, states can take part of the federal tax levy. So, they are generally said to have "no" inheritance tax. But, that really means that they take part of the amount that is calculated as federal estate tax. The following states participate in the pick-up tax: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Maine, Minnesota, Missouri, Nevada, New Mexico, North Dakota, Oregon, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming. The other states impose a state death tax, either in the form of an inheritance tax or an estate tax. An inheritance tax is a tax on the assets received by a person. An estate tax is a tax on the assets of the decedent. The maximum tax in each of those states is:
The state death tax is not "in addition to" the federal estate tax because the federal law allows an offset for the payment of state death taxes. So, the tax is difficult for the layman to calculate. If you need to specifically calculate the tax due, you would be wise to depend on your Certified Public Accountant. Many states have designated different classes of beneficiaries. Classes of people most closely related to the decedent are, for the most part, taxed at a lower rate than are more distant relatives or heirs. |
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