New Pennsylvania Law Eliminates Tax on Inheritance of Family Farms if Law’s Conditions are Met

Pennsylvania has enacted a law that does away with the inheritance tax when agricultural real estate is inherited if certain conditions are met. Previously, agricultural real estate which passed to children was taxed at a rate of 4.5%.

Pennsylvania’s current inheritance tax rates are as follows:

  • 0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
  • 4.5 percent on transfers to direct descendants and lineal heirs;
  • 12 percent on transfers to siblings; and
  • 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.

The new law (House Bill 761) which was signed into law by the Governor on June 30th includes a section which applies to the estates of people dying after June 30, 2012. It provides that the inheritance of real estate devoted to the business of agriculture between members of the same family is exempt from tax if certain conditions are met.

You can earn more about the specifics of House Bill 761 by visiting our founding attorney, Jeff Marshall’s Elder Law and Estate Planning blog