This morning, the office of House Speaker Paul Ryan released a blueprint for tax reform that would overhaul major components of the U.S. tax code and lower taxes for households and businesses. The key details of the plan...
- The Tax Policy Blog
- Pennsylvania Legislators Give Family-Owned Farms a Break ...
Pennsylvania Legislators Give Family-Owned Farms a Break from the Inheritance Tax
In a recent vote, the Pennsylvania House of Representatives overwhelmingly passed H.B. 1864, which seeks to modify how agricultural property is taxed by the state's inheritance tax when the owner dies.
The difference between an estate tax and an inheritance tax is that an inheritance tax rate depends on the relationship of the heir to the decedent, while estate tax rates do not. Pennsylvania's inheritance tax rates are the following:
· 0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
· 4.5 percent on transfers to direct descendants and lineal heirs;
· 12 percent on transfers to siblings; and
· 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.
If the bill is made law, it would effectively exempt family farms from the inheritance tax. Specifically, it would exempt "transfers of an agricultural commodity, agricultural conservation easement, agricultural reserve, agricultural use property or a forest reserve."
Though the absence of an inheritance/estate tax is ideal, this possible policy change would certainly move Pennsylvania in the right direction.
(For further reading concerning Pennsylvania's inheritance tax debate, see David S. Logan's testimony before the Pennsylvania House Finance Committee, The Economic Effects of the Estate Tax.)
Follow David S. Logan on Twitter @Loganomix
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.
Recent Blog Posts
Related State Articles
- Lunch Links: PA Gov Drops Tax Plans; Alaska Legislature to Meet Again; NC Couple Stole Tax Refunds from 300 People
- Lunch Links: New York Adds Credits, Online Travel Companies Win More, Donut Tax Evasion
- Lunch Links: Philadelphia Approves Soda Tax; Bill Would Require IRS to Return Seized Assets; Smoot-Hawley Anniversary
- 1 of 55
- next ›