Question

tax question How do state tax payment or state death tax payments affect the estate tax return?

Answer 1

In 2016, state and local governments raised $5 billion from property and inheritance taxes, well below 1 percent of overall revenue from the combined state and local own source. Both states levied a property tax in 2000, the last year, these taxes also received less than 1 percent of general income from combined state and local own-source.

The estate tax is paid on the sale of property at the time of the death of a person by the estate itself. States will divide assets across jurisdictions if the deceased person in multiple jurisdictions has resided or owned property. The inheritance tax is similar to a property tax, but instead of the family, it is paid by the heirs. The tax is levied on the land of a citizen or in-state property of a non-resident at the time of death. The tax depends on the relationship between the heir and the deceased. Surviving spouses are excluded from inheritance tax in all jurisdictions; some states also exclude direct offspring. Inheritance tax is levied on Connecticut, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania.

The amount of combined federal and state property tax that a property owes depends on many factors, including whether or not the death happens in a state that has maintained the state property tax. The following sections address the effect of maintaining a state estate tax on the tax bill of a family. This effect, like the total property tax bill, varies by year of death and the size of the property. Review of existing property data and analysis of the federal property tax law provisions lead to the following conclusions.