If you die in the State of New York, you may have to pay New York State inheritance taxes. This is in addition to potentially paying federal estate taxes. Until fairly recently only the first $1,000,000 inherited in an estate was exempt from New York State estate taxation. However, the law recently changed. The tax exemption for an estate is now $2,062,500. This means, the first $2,062,500 inherited from an individual dying in New York State is exempt from New York State inheritance taxation and only those funds over this amount are taxed in New York. This exemption increases to $3,125,000 in the year 2015. In 2016, it goes to $4,187,500, and in 2017 it increases again to $5,250,000.
Catching the Federal Estate Tax Exemption
The slowly rising New York State estate tax exemption is designed to catch up with the federal tax exemption in the year 2019. In 2019 it will match the federal exemption. The federal exemption is currently $5,340,000 and is indexed to inflation. Someone dying in the State of New York with assets of more than 105% of the New York State estate tax exemption is subject to New York State inheritance taxation.
Estate Planning
The annual increase of the New York State estate tax exemption until 2019 should be taken into consideration with regard to individual estate plans.
