Wednesday, April 2, 2014
On April 1, New York state more than doubled its estate tax exemption amount from $1 million to $2,062,500. And by 2019, the New York exemption will match the generous federal exemption, projected to be $5.9 million. This will make planning easier for a lot of people, but there is still one big trap New Yorkers should look out for.
New Yorkers who die with just 5% more than the new exemption will face a “cliff.” They will be taxed on the full value of their estate, not just the amount over the exemption. This means the new law could translate into a marginal New York estate tax rate of nearly 164%, as shown in this comment letter from the New York State Society of CPAs.
See Ashlea Ebeling, The New New York Estate Tax Beware a 164% Marginal Rate, Forbes, April 1, 2014.