PA Inheritance Tax FAQ | Rates, Deadlines & Exemptions

Question 1

What is the Pennsylvania inheritance tax rate?

Accepted Answer

Pennsylvania taxes inheritances based on relationship, not size. A surviving spouse pays 0%. Children, grandchildren, parents, and grandparents pay 4.5%. Siblings pay 12%. Everyone else — nieces, nephews, friends, unmarried partners — pays 15%. Qualified charities are exempt. See 72 P.S. § 9116 for the full rate schedule.

Question 2

Does Pennsylvania have an inheritance tax exemption amount?

Accepted Answer

No general exemption exists. Unlike the federal estate tax, Pennsylvania inheritance tax applies from the first dollar of a taxable transfer. Targeted exemptions do exist — life insurance paid to a named beneficiary, qualified family-owned business interests, family farms, and certain retirement accounts — but there is no across-the-board threshold.

Question 3

When is the Pennsylvania inheritance tax return due?

Accepted Answer

The REV-1500 return and payment are due nine months after the date of death. Filing late means interest accrues from that nine-month mark. The return goes to the Register of Wills in the county where the person lived, not to Harrisburg directly, even when there is no probate estate.

Question 4

How does the 5% Pennsylvania inheritance tax discount work?

Accepted Answer

Pennsylvania grants a 5% discount on any inheritance tax paid within three months of death. Families routinely make a good-faith prepayment before the exact numbers are final to capture it. On a $400,000 estate passing to children, that discount is roughly $900 — real money for one early check.

Question 5

Is life insurance subject to Pennsylvania inheritance tax?

Accepted Answer

Life insurance paid to a named living beneficiary is fully exempt from Pennsylvania inheritance tax. Proceeds payable to the estate — because no beneficiary was named or the named beneficiary died first — are taxable. Reviewing beneficiary designations is the cheapest inheritance tax fix available to most families.

Question 6

Are retirement accounts taxed by Pennsylvania inheritance tax?

Accepted Answer

It depends on the owner's age at death. IRAs and 401(k)s owned by someone who died before age 59½ are generally exempt, because the owner could not have withdrawn penalty-free. Accounts owned by someone 59½ or older are taxable at the beneficiary's rate. Roth accounts follow the same rule.

Question 7

Does a living trust avoid Pennsylvania inheritance tax?

Accepted Answer

No. A revocable living trust avoids probate, not inheritance tax. Trust assets are still reported on the REV-1500 and taxed at the beneficiary's rate. Reducing the tax requires irrevocable structures, lifetime gifting outside the one-year lookback, beneficiary planning, or a qualifying business or farm exemption.

Question 8

Are gifts made before death taxed in Pennsylvania?

Accepted Answer

Pennsylvania applies a one-year lookback. Gifts made within twelve months of death are pulled back into the taxable estate, minus a $3,000 per-recipient annual exclusion. Gifts made more than a year before death escape the tax entirely. Pennsylvania has no separate gift tax of its own.

Question 9

Is jointly owned property subject to PA inheritance tax?

Accepted Answer

Usually yes, on the decedent's fractional share. Two exceptions matter: property held jointly with a spouse is exempt, and property retitled into joint names within one year of death is taxed on the full value. Adding an adult child to a deed or account often creates tax, not savings.

Question 10

Who is responsible for paying Pennsylvania inheritance tax?

Accepted Answer

The estate's personal representative files the REV-1500 and typically pays from estate funds, but the tax is ultimately owed by each beneficiary on what they receive. Non-probate recipients — joint owners, POD account holders, trust beneficiaries — can be personally liable for the tax on their transfer.

Question 11

Do out-of-state heirs pay Pennsylvania inheritance tax?

Accepted Answer

Yes. The tax follows the decedent's residency and the location of the property, not the beneficiary's address. A child living in Florida still pays 4.5% on an inheritance from a Pennsylvania parent. Nonresidents who owned Pennsylvania real estate are also taxed on that property.

Question 12

Can Pennsylvania inheritance tax be reduced legally?

Accepted Answer

Yes, with planning done well before death. The common levers are lifetime gifting outside the one-year window, naming beneficiaries on life insurance and retirement accounts, charitable bequests, the family-owned business and farm exemptions, and paying early to capture the 5% discount. Deathbed transfers usually backfire.

Pennsylvania Inheritance Tax FAQ

Common questions

Talk with a Pennsylvania estate planning attorney.