PA inheritance tax is a state tax on property that passes from a person who dies to the people who receive it. The rate depends on your relationship to the person who died: 0% for a surviving spouse, 4.5% for children and grandchildren, 12% for brothers and sisters, and 15% for most other people. The return is due nine months after death, and paying within three months earns a 5% discount.
This guide walks through the rules in plain language. It is part of our estate planning resources for Pennsylvania families. If you are settling an estate right now, our page on how estate administration works in Pennsylvania covers the court side of the process.
Key takeaways
– Pennsylvania taxes what heirs receive, not just large estates. There is no minimum estate size before the tax applies.
– The rate is set by relationship: 0% spouse, 4.5% lineal heirs, 12% siblings, 15% everyone else.
– Life insurance is not subject to the tax. Many retirement accounts are exempt only in certain situations.
– The REV-1500 return is due nine months after death. Paying within three months reduces the tax by 5%.
– Planning ahead can lower the bill, but most strategies must be in place well before death.
What is the Pennsylvania inheritance tax?
The Pennsylvania inheritance tax is set out in the Tax Reform Code, 72 P.S. § 9101 et seq.. It applies to most property owned by a Pennsylvania resident at death. It also applies to Pennsylvania real estate and tangible property (physical items like vehicles and furniture) owned by people who lived in another state.
An estate tax is charged on everything a person owns at death. An inheritance tax is charged on each share, based on who receives it. Pennsylvania uses the inheritance model. The federal estate tax is a separate system that most families never owe.
How much is inheritance tax in PA?
How much you owe depends on who you are to the person who died (the “decedent”). The table below shows the current rates under 72 P.S. § 9116.
| Who receives the property | Tax rate |
|---|---|
| Surviving spouse | 0% |
| Parent receiving from a child who was 21 or younger | 0% |
| Lineal heirs: children, grandchildren, and other descendants, plus parents and grandparents | 4.5% |
| Brothers and sisters (siblings) | 12% |
| Everyone else, such as nieces, nephews, cousins, and friends | 15% |
| Qualified charities and government bodies | 0% |
The tax is figured on the net value of the share. That means debts, funeral costs, and administration expenses are generally subtracted first. Those costs include fees paid to the personal representative (the executor or administrator who manages the estate) and to the estate’s lawyer.
What is taxable and what is exempt
Most people assume only bank accounts and real estate count. The rules reach further than that, and they also exclude some large assets.
Usually taxable
- Real estate titled in the decedent’s name alone, including Pennsylvania mineral rights.
- Bank accounts, brokerage accounts, stocks, and bonds.
- Vehicles, household goods, and business interests.
- The decedent’s share of property owned jointly with someone other than a spouse. Generally, the taxable part is the decedent’s fractional share.
- Gifts made within one year of death, to the extent they exceed $3,000 per recipient.
- Assets in a revocable living trust. A revocable trust can avoid probate, but it does not avoid this tax.
Usually exempt
- Life insurance proceeds. Pennsylvania does not tax life insurance paid to a beneficiary.
- Property owned jointly by spouses. Property held by spouses together passes to the survivor tax-free.
- Certain retirement accounts. A retirement account is generally exempt if the decedent did not have the right to withdraw the money without penalty at death, such as someone younger than 59½. If the decedent could freely withdraw the funds, the account is usually taxable.
- Qualified family farms and small family-owned businesses, if strict conditions are met.
- Real estate and tangible property located outside Pennsylvania, such as a cabin in West Virginia.
Filing the REV-1500 and meeting the deadline
The return is Form REV-1500, the Pennsylvania Inheritance Tax Return for a resident decedent. It lists every asset, every deduction, and every beneficiary with the tax owed on each share.
The return is filed with the Register of Wills in the county where the decedent lived. The Register of Wills acts as an agent of the Pennsylvania Department of Revenue. For a Washington County resident, that is the Register of Wills at the Washington County Courthouse, 1 South Main Street, Washington, PA 15301. For an Allegheny County resident, it is the Register of Wills in the City-County Building, 414 Grant Street, Pittsburgh, PA 15219.
Key dates
| Deadline | What happens |
|---|---|
| Within 3 months of death | Paying the tax earns a 5% discount on the amount paid |
| 9 months after death | Return and payment are due |
| After 9 months | Interest runs on unpaid tax, and penalties may apply |
You do not need the full return to get the discount. Many estates make an estimated payment early and file the REV-1500 later. The Department of Revenue then reviews the return and issues a notice of appraisement (its official statement of the tax due).
Free download: Estate Planning Document Checklist → /estate-planning-checklist/
Gather deeds, account statements, beneficiary forms, and policy details in one place. Your family will need the same papers to complete an inheritance tax return.
Who pays inheritance tax in PA?
This question causes a lot of confusion. In practice, the personal representative usually pays the tax out of estate funds before distributing what is left. Legally, though, each beneficiary is responsible for the tax on the share he or she receives.
That matters for property that passes outside the will, such as a payable-on-death account. The person who receives it still owes tax on it. Often, the personal representative collects the tax from that person or pays it and reduces that person’s share of the estate. A will can also say how the tax should be paid. This is called a tax apportionment clause, and it should match the rest of your plan.
How to avoid inheritance tax in PA (or lower it)
You cannot avoid the tax entirely in most estates. You can often reduce it with planning. These are common approaches, and each has trade-offs that should be weighed for your family.
- Use life insurance. Because proceeds are not taxed, life insurance can fund the tax bill or provide for heirs at a 0% rate.
- Make gifts well ahead of time. Gifts made more than one year before death are generally outside the tax. Gifts have other consequences, including federal gift tax reporting and Medicaid look-back rules, so they need careful thought.
- Review retirement accounts. The timing and type of account can change whether it is taxed. Beneficiary choices also matter for income tax.
- Leave property to a spouse. Transfers to a spouse are taxed at 0%, although the property may be taxed later when the surviving spouse dies.
- Plan charitable gifts. Gifts to qualified charities are generally exempt.
- Check the family farm and business exemptions. If you own farmland or a small family business in Washington County, find out whether you could qualify and what conditions must continue after death.
- Pay early. After a death, paying within three months earns the 5% discount. That is the simplest saving available to an estate.
Be careful with “deathbed” transfers. Adding a child to a deed or account shortly before death often fails to save tax because of the one-year rule, and it can create new problems with creditors and capital gains.
Mineral rights and PA inheritance tax
Many families in Cecil Township, Canonsburg, and the rest of Washington County own oil and gas rights. Those rights are taxable property and must be valued on the REV-1500. Even an unleased interest can have value. Valuation of these interests is often the hardest part of the return, and it usually requires production records, the lease, and sometimes an appraisal.
Frequently asked questions
Is there an inheritance tax exemption amount in Pennsylvania?
No general exemption amount applies. The tax is charged on each share based on the heir’s relationship to the decedent, starting with the first dollar. Some assets are exempt, such as life insurance and property jointly owned by spouses, and a family exemption may reduce the estate.
Do I pay Pennsylvania inheritance tax if I live in another state?
It depends on where the decedent lived and where the property is located. If the decedent lived in Pennsylvania, the tax generally applies to the estate even if heirs live elsewhere. If the decedent lived out of state, Pennsylvania generally taxes only real estate and tangible property located here.
Is a house left to a child taxed in Pennsylvania?
Yes. A house left to a child is generally taxed at the 4.5% lineal rate on its value at the date of death, minus allowable deductions. If the house was owned jointly by the parents, no tax is due at the first parent’s death, but tax applies when the surviving parent dies.
When is the PA inheritance tax due?
The tax is due nine months after the date of death. If the estate pays within three months, it receives a 5% discount on the amount paid. Interest is charged on tax paid after nine months, so estates that need more time often make an estimated payment first.
Is life insurance subject to Pennsylvania inheritance tax?
No. Life insurance proceeds paid to a named beneficiary are not subject to Pennsylvania inheritance tax. That is one reason life insurance is often used to provide cash for heirs or to cover the tax due on other assets, such as a family home or mineral rights.
Talk with us about your situation
Whether you are planning ahead or handling a parent’s estate, we can help you see which assets are taxable and what deadlines apply. Call (304) 982-1586 or request a consultation. After you call, we will ask a few questions about the estate or your plan, then schedule a time to meet and tell you what documents to bring.
About the author: Heather N. Kostrub is an attorney at Kostrub Law Firm, PLLC, where she focuses on estate planning, wills, trusts, powers of attorney, and family and business succession. Read Heather’s bio.
This page is general information, not legal advice. Reading it does not create an attorney-client relationship.