NEW YORK TO CONSIDER REVAMPING ITS ESTATE TAX
December 14, 2013
By: Robert G. McDermott, Esq.
Email: bob@mcdermottlaw.com
In a December 2013 report, the New York State Tax Relief Commission is suggesting changes to New York State’s estate tax.
The proposal would not eliminate the New York Estate Tax completely. Rather, the proposed revisions would lower top estate tax rates, and provide a much higher exemption which would basically match the new permanent federal estate tax exemption, indexed for inflation.
Currently, New York exempts only the first $ 1 million from estate tax. The federal estate tax exemption is $ 5.25 million in 2013, rising to $5.34 million in 2014 (indexed for inflation).
The proposal recommends that the New York estate tax exemption be amended to match
the federal estate tax exemption. So, if the proposal were enacted into law, the estate of an individual with a net worth of $ 5.34 million (the federal estate tax exemption amount in 2014) would owe no New York state estate tax. Under the proposal, the top tax rate on amounts above that would be lowered from 16% to 10%.
If the proposal is passed, the $5.34 million estate (in 2014) would be free of both federal and New York state estate tax. Currently, an estate of $ 5.34 million would owe a bit over $ 430,000 in New York state estate tax.
If the proposal is enacted into law, it would eliminate one reason for successful New Yorkers to permanently relocate outside of New York, says the report.
The proposal may be considered in Albany in the 2014 legislative session. If New York acts on the proposal, that would make New York a more estate tax-friendly place to die than Connecticut or New Jersey: Connecticut has a $2 million exemption (and a gift tax), and New Jersey has a $675,000 exemption (and a separate inheritance tax).
A copy of the New York State Tax Relief Commission report is at the following web site:
http://www.governor.ny.gov/assets/documents/commission_report.pdf
We will monitor further developments.
Robert G. McDermott, Esq.
McDermott Law Offices
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Suite 300
Hauppauge, New York 11788
Tel. 631-414-0094
Fax 631-414-0098
Email: bob@mcdermottlaw.com
Web: www.mcdermottlaw.com
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