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§ 9116. Inheritance tax

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 72 P.S. Taxation and Fiscal AffairsEffective: July 1, 2019

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 72 P.S. Taxation and Fiscal Affairs
Chapter 5. Tax Reform Code of 1971
Article XXI. Inheritance Tax (Refs & Annos)
Part IV. Rate of Tax
Effective: July 1, 2019
72 P.S. § 9116
§ 9116. Inheritance tax
(a)(1) Inheritance tax upon the transfer of property passing to or for the use of any of the following shall be at the rate of four and one-half per cent:
(i) grandfather, grandmother, father, mother, except transfers under subclause (1.2), and lineal descendants; or
(ii) wife or widow and husband or widower of a child.
(1.1) Inheritance tax upon the transfer of property passing to or for the use of a husband or wife shall be:
(i) At the rate of three per cent for estates of decedents dying on or after July 1, 1994, and before January 1, 1995.
(ii) At a rate of zero per cent for estates of decedents dying on or after January 1, 1995.
(1.2) Inheritance tax upon the transfer of property from a child twenty-one years of age or younger to or for the use of a natural parent, an adoptive parent or a stepparent of the child shall be at the rate of zero per cent.
(1.3) Inheritance tax upon the transfer of property passing to or for the use of a sibling shall be at the rate of twelve per cent.
<Section 32 of Act 2019, June 28, P.L. 50, No. 13, provides that the addition of subsec. (a)(1.4) by that Act shall apply to property transferred by a natural parent, an adoptive parent or a stepparent who dies after December 31, 2019.>
(1.4) Inheritance tax upon the transfer of property to or for the use of a child twenty-one years of age or younger from a natural parent, an adoptive parent or a stepparent of the child shall be at the rate of zero per cent.
<Section 32 of Act 2019, June 28, P.L. 50, No. 13, provides that the amendment of subsec. (a)(2) by that Act shall apply to property transferred by a natural parent, an adoptive parent or a stepparent who dies after December 31, 2019.>
(2) Inheritance tax upon the transfer of property passing to or for the use of all persons other than those designated in subclause (1), (1.1), (1.2), (1.3) or (1.4) or exempt under section 2111(m) shall be at the rate of fifteen per cent.
(3) When property passes to or for the use of a husband and wife with right of survivorship, one of whom is taxable at a rate lower than the other, the lower rate of tax shall be applied to the entire interest.
(b)(1) When the decedent was a resident, the tax shall be computed upon the value of the property, in excess of the deductions specified in Part VI, at the rates in effect at the transferor's death.
(2) When the decedent was a nonresident, the tax shall be computed upon the value of real property and tangible personal property having its situs in this Commonwealth, in excess of unpaid property taxes assessed on the property and any indebtedness for which it is liened, mortgaged or pledged, at the rates in effect at the transferor's death. The person liable to make the return under section 21361 may elect to have the tax computed as if the decedent was a resident and his entire estate was property having its situs in this Commonwealth, and the tax due shall be the amount which bears the same ratio to the tax thus computed as the real property and tangible personal property located in this Commonwealth bears to the entire estate of the decedent.
(b.1) The inheritance tax due upon the transfer of property passing to or for the use of a husband or wife shall be the lesser of the tax imposed under subsection (a)(1.1) or the tax due after the allowance of the credit provided for under section 2112.2
(c) When any person entitled to a distributive share of an estate, whether under an inter vivos trust, a will or the intestate law, renounces his right to receive the distributive share receiving therefor no consideration, or exercises his elective rights under 20 Pa.C.S. Ch. 22 (relating to elective share of surviving spouse) receiving therefor no consideration other than the interest in assets passing to him as the electing spouse, the tax shall be computed as though the persons who benefit by such renunciation or election were originally designated to be the distributees, conditioned upon an adjudication or decree of distribution expressly confirming distribution to such distributees. The renunciation shall be made within nine months after the death of the decedent. In the case of a surviving spouse taking his elective share of an estate, the renunciation shall be made within the time for election and any extension thereof under 20 Pa.C.S. § 2210(b) (relating to procedure for election; time limit). Notice of the filing of the account and of its call for audit or confirmation shall include notice of the renunciation or election to the department. When an unconditional vesting of a future interest does not occur at the decedent's death, the renunciation specified in this subsection of the future interest may be made within three months after the occurrence of the event or contingency which resolves the vesting of the interest in possession and enjoyment.
(d) In case of a compromise of a dispute regarding rights and interests of transferees, made in good faith, the tax shall be computed as though the persons so receiving distribution were originally entitled to it as transferees of the property received in the compromise, conditioned upon an adjudication or decree of distribution expressly confirming distribution to such distributees. Notice of the filing of the account and of its call for audit or confirmation shall include notice to the department.
(e) If the rate of tax which will be applicable when an interest vests in possession and enjoyment cannot be established with certainty, the department, after consideration of relevant actuarial factors, valuations and other pertinent circumstances, may enter into an agreement with the person responsible for payment to establish a specified amount of tax which, when paid within sixty days after the agreement, shall constitute full payment of all tax otherwise due upon such transfer. Rights of withdrawal of a surviving spouse not exercised within nine months of the transferor's death shall be ignored in making such calculations.
(f) Property subject to a power of appointment, whether or not the power is exercised and notwithstanding any blending of the property with the property of the donee, shall be taxed only as part of the estate of the donor.

Credits

1971, March 4, P.L. 6, No. 2, art. XXI, § 2116, added 1991, Aug. 4, P.L. 97, No. 22, § 36, effective in 60 days. Amended 1994, June 16, P.L. 279, No. 48, § 36, effective July 1, 1994; 1995, June 30, P.L. 139, No. 21, § 19, effective July 1, 1995; 2000, May 24, P.L. 106, No. 23, § 16, effective July 1, 2000; 2019, June 28, P.L. 50, No. 13, § 21, effective July 1, 2019.
JT. ST. GOVT. COMM. COMMENT--1981
Source: Paragraphs (a)(1), (2) and (3) from Sections 403 through 405, respectively, of the Inheritance and Estate Tax Act of 1961 [72 P.S. §§ 2485-403 to 2485-405]. Paragraphs (b)(1) and (b)(2) from Sections 401 and 402 [72 P.S. §§ 2485-401, 2485-402], respectively. Subsections (c), (d) and (f) from Sections 406 through 408 [72 P.S. §§ 2485-406 to 2485-408], respectively. Paragraph (a)(2) and subsection (e) are added.
Comment: Paragraph (a)(1) beneficiaries were referred to as “Class A” beneficiaries in the Inheritance and Estate Tax Act of 1961 and paragraph (a)(2) beneficiaries were referred to as “Class B” beneficiaries. See also act of April 6, 1980 (P.L. 102, No. 39) [68 P.S. § 41 et seq.] which refers to beneficiaries by class for inheritance tax purposes. In light of Section 2204 of the Probate, Estates and Fiduciaries Code [20 Pa.C.S.A. § 2204], subsection (c) conforms inheritance tax law to the elective share provisions and simplifies the time limit provision by removing the “three months after probate” rule. Subsection (e) gives the Department of Revenue the authority to compromise valuations where the tax on future interests depends on future contingencies.
HISTORICAL AND STATUTORY NOTES
Act 1991-22 legislation
Section 43(3) of Act 1991, August 4, P.L. 97, No. 22, provides:
“The addition of Article XXI shall apply to the estate of decedents dying on or after the effective date of Article XXI and to inter vivos transfers made by decedents dying on or after the effective date of Article XXI regardless of the date of transfer.”
Act 1994-48 legislation
The 1994 amendment in subsec. (a)(1)(i) deleted references to husband and wife, added subsec. (a)(1.1) and subsec. (b.1), and in subsec. (e) substituted “an interest vests” for “a future interest vests” and added the provision relating to rights of withdrawal of a surviving spouse not exercised within six months of the transferor's death.
Section 43(4) of Act 1994, June 16, P.L. 279, No. 48, provides:
“(i) The amendment or addition of sections 2112(f) and (g) and 2116(a), (b.1) and (e) of the act shall apply to the estates of all decedents dying on or after July 1, 1994, and to inter vivos transfers made by decedents dying on or after July 1, 1994, regardless of the date of the transfer.
“(ii) The remainder of the amendment or addition of Article XXI of the act shall apply to the estates of decedents dying on or after January 1, 1998, and to inter vivos transfers made by decedents dying on or after January 1, 1998, regardless of the date of the transfer.”
Act 1995-21 legislation
The 1995 amendment, in subdivision (a)(1.1)(i), substituted “January 1, 1995” for “January 1, 1996”; rewrote subdivision (a)(1.1)(ii); and deleted subdivision (a)(1.1)(iii). Prior to amendment, subdivisions (a)(1.1)(ii) and (a)(1.1)(iii) read:
“(ii) At a rate of zero per cent for estates of decedents dying on or after January 1, 1995.
“(iii) At the rate of one per cent for estates of decedents dying on or after January 1, 1997, and before January 1, 1998.”
Section 26 of Act 1995, June 30, P.L 139, No. 21 provides that the amendment or reenactment of this section shall apply to the estates of decedents dying on or after January 1, 1995, and to inter vivos transfers made by decedents dying on or after January 1, 1995, without regard to the date of the transfer.
Act 2000-23 legislation
Act 2000-23, in subsec. (a)(1), reduced the tax rate from six to four and one-half per cent; in subsec. (a)(1)(i), added “, except transfers under subclause (1.2),”; added subclauses (1.2) and (1.3); inserted references to subclauses (1.2) and (1.3) in subclause (2); and, in subsec. (c), substituted “The renunciation shall be made within nine months after the death of the decedent. In the case of a surviving spouse taking his elective share of an estate, the renunciation shall be made within” for “The renunciation shall be made within nine months after the death of the decedent or, in the case of a surviving spouse, within.”
Act 2019-13 legislation
Act 2019-13, § 21, added subsec. (a)(1.4); and in subsec. (a)(2), substituted “subclause (1), (1.1), (1.2), (1.3) or (1.4)” for “subclause (1), (1.1), (1.2) or (1.3)”.
Section 32 of 2019, June 28, P.L. 50, No. 13, effective July 1, 2019, provides that “[t]he amendment or addition of section 2116(a)(1.4) and (2) [72 P.S. § 9116(a)(1.4) and (2)] of the act shall apply to property transferred by a natural parent, an adoptive parent or a stepparent who dies after December 31, 2019.”
Prior Laws:
1961, June 15, P.L. 373, Art. IV, §§ 401 to 408 (72 P.S. §§ 2485--401 to 2485--408).
1965, Dec. 22, P.L. 1205, § 1.
1967, Dec. 29, P.L. 915, No. 411, § 1.
1971, June 17, P.L. 171, No. 15, § 1.
1982, Dec. 13, P.L. 1086, No. 255, § 1 (72 Pa.C.S.A. § 1716).

Footnotes

72 P.S. § 9136.
72 P.S. § 9112.
72 P.S. § 9116, PA ST 72 P.S. § 9116
Current through 2020 Regular Session Act 8. Some statute sections may be more current, see credits for details.
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