Rep. Valerie Gaydos from Allegheny has introduced a bill aiming to abolish the Pennsylvania Inheritance Tax, often referred to as the “death tax.” The proposed legislation, House Bill 1394, seeks to alleviate the financial strain on families during periods of bereavement by eliminating the state’s authority to impose this tax.
“Pennsylvania is one of only six states that still imposes an inheritance tax,” Gaydos stated. “At a time when families are grieving the loss of a loved one, the state should not be handing them a tax bill. The inheritance should go to the people it was intended for without the government taking a portion.”
The current Pennsylvania Inheritance Tax rates depend on the relationship between the deceased and their heirs: 0% for transfers to a surviving spouse or parent from a child under 21; 4.5% for direct descendants and lineal heirs; 12% for siblings; and 15% for other heirs, with exceptions for charitable organizations, exempt institutions, and government entities.
“This is yet another tax that disincentivizes business investment in Pennsylvania and encourages high-net-worth individuals to relocate to more tax-friendly states,” Gaydos commented. “Other states have already recognized this and updated their laws. If we want to keep families and businesses in Pennsylvania, we need to modernize our tax structure.”
Unlike federal estate taxes that allow an exclusion amount—$12.92 million as of 2023—Pennsylvania’s inheritance tax lacks such exemptions, potentially burdening middle-class families significantly.
“The federal government has acknowledged the impact of these taxes and raised thresholds to prevent undue hardship,” said Gaydos. “Pennsylvania must follow that lead and remove this outdated burden. Eliminating the inheritance tax will allow individuals to pass on their hard-earned assets without penalty during an already difficult time.”
The bill has been submitted to the House Finance Committee for review.
