Tuesday, February 22, 2011
Some Americans decide where to retire partially based upon state estate taxes. It’s growing harder to determine where to retire for these people because these state estate or inheritance taxes are constantly in flux. Illinois became the latest state to impose state estate taxes last month retroactive to January 1, 2011. Now there are 22 states with estate and/or inheritance taxes, plus the District of Columbia. Typically, state estate taxes have a much lower exemption level than the current $5 million federal exemption, but they also impose a lower tax rate.
One reason for all the recent state changes is that Congress took so long to decide what to do with the federal estate tax, and many states base their tax system off of the federal system. Tax lawyers in some states are warning legislators that imposing or raising state estate taxes will drive wealthy residents to other states with lower or no estate taxes.
To keep track of state estate taxes, click here for Forbes’ map of the 2011 state estate tax laws.
See Ashlea Ebeling, More States Want to Tax Your Estate, Forbes, Feb. 15, 2011.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.