What Are Estate Taxes in Pennsylvania?

You may assume that you have allocated enough assets throughout your lifetime to pass down to your loved ones and ensure they are financially taken care of when you are no longer around. However, you must not forget that, just like most things, there may be tax implications on these inherited assets. This may ultimately affect the amount or value your loved ones obtain. Without the need for further introduction, please continue reading to learn about the estate taxes imposed in the Commonwealth of Pennsylvania and how one of the experienced Butler County irrevocable tax trust attorneys at Heritage Elder Law & Estate Planning, LLC can help you minimize them through a strategic estate plan.

What are estate taxes in the Commonwealth of Pennsylvania?

Well, for starters, there is a federal estate tax in place that primarily affects high-net-worth individuals. This is because this tax is only imposed on estates valued at $13.99 million or more for individuals and $27.98 million or more for married couples, as of 2025 and minus any applicable gifts. From here, the estate tax range may range from 18 percent for taxable amounts of $1 to $10,000 to 40 percent for taxable amounts of $1 million or more.

With that being said, you may rest a little easier knowing that the Commonwealth of Pennsylvania is one of 38 states that does not impose estate taxes. However, there is such a thing as an inheritance tax. This charges your beneficiaries with the taxes on the net value of assets they receive upon your death. Its rate may depend on your relationship with the individual set to inherit your assets. More specifically, the rates read as follows:

• 0 percent on transfers to a surviving spouse or child aged 21 years or younger.
• 4.5 percent on transfers to direct descendants and lineal heirs (i.e., grandchild, son-in-law, etc).
• 12 percent on transfers to siblings and half-siblings.
• 15 percent on transfers to other heirs (i.e., friends and distant relatives), besides charitable organizations and exempt institutions.

Is it possible to minimize the imposed inheritance tax?

Depending on the size of your estate and the beneficiaries you wish to inherit it, federal estate taxes and state inheritance taxes may significantly drain from its value. One solution we commonly refer our clients to is an irrevocable tax trust. Essentially, with this trust type, you may relinquish your ownership rights and control over the assets used to fund it forever.

While this may seem like a drastic measure, after these assets are held within the trust for three years or more, they may be shielded from future federal estate taxes. And in the Commonwealth of Pennsylvania, these assets may be protected from inheritance taxes after 12 months. Because these lengths of time must pass by for this trust type to be beneficial, we encourage you to work on establishing it sooner rather than later.

To conclude, you must be fully equipped to enter your upcoming estate planning procedures. Your preparation is incomplete without hiring one of the skilled Butler County estate planning & probate attorneys. Contact Heritage Elder Law & Estate Planning, LLC today.