PA Family-Owned Business Exemption

72 P.S. § 9111(t) exempts qualified family-owned business interests from Pennsylvania inheritance tax. It is the most valuable exemption most business owners have never heard of.

Qualification

Business must have fewer than 50 employees, less than $5M in net book value, and have been owned by the decedent for at least 5 years prior to death.

Family-only recipients

Transfer must go to a 'member of the same family' — spouse, lineal descendants, siblings, parents, and certain in-laws.

7-year clawback

The exemption is lost if the business is sold or ceases family ownership within 7 years of the decedent's death. Plan the succession before the death.