Pennsylvania inheritance tax for siblings on the chopping block, again

(The Center Square) — Pennsylvania remains one of six states that still levy an inheritance tax, but an old plan to gradually phase it out resurfaced last month.

Senate Bill 75, sponsored by Sen. Michele Brooks, R-Greenville, would reduce the sibling inheritance tax over seven years until it’s fully eliminated.

“I have long believed that the inheritance tax amounts to double taxation upon the death of a loved one, and I am committed to eliminating the burdensome tax on families,” Brooks wrote in a legislative memo. “Families should not have to concern themselves with paying an additional tax to the state while dealing with the loss of a sibling.”

Though the tax brings in a fair amount of revenue — more than $1 billion annually — the burden mostly falls on middle-class residents.

Partially, that more widespread burden comes from when the tax is applied. For immediate relatives, there’s no tax on what’s passed down. However, if left to a niece or nephew, the 15% tax kicks in, as The Center Square previously reported. Siblings would also pay a 12% tax.

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This bill could change that, driving down the revenue the state receives, but removing the tax burden from many people as they deal with a death in the family.

“The senator believes this amounts to double taxation and she is committed to decreasing and ultimately eliminating this burdensome tax on grieving families,” said Adam Gingrich, chief of staff for Brooks. “It is also a fair point to acknowledge only a handful of states retain an Inheritance Tax.”

Though the bill doesn’t propose replacing the tax revenue, Brooks’s office said they had heard from residents who’d be adversely affected by Pennsylvania’s inheritance tax laws.

Not all inheritance taxes would get abolished by the bill, either. The inheritance tax would still apply to direct descendants and lineal heirs (4.5%) and to other heirs (15%).

A similar bill was introduced in the General Assembly’s last session with bipartisan support, but stalled. For now, it’s been referred to the Senate Finance Committee to await further action.

“The senator hopes all Pennsylvanians will benefit from reducing and ultimately eliminating this antiquated form of state taxation policy,” Gingrich said.

Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.

This article was republished with permission from The Center Square.

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