Estate of Affairs: A Handy and Essential Guide to New York Estate Tax

If you have a taxable estate, you can expect to pay one-sixth of its value in federal estate taxes.

But what about in New York State? How are New York State inheritance taxes different? What is the New York estate tax rate? 

If you live in New York and own a taxable estate, you’ll need to know the current New York state estate tax rules as well as the New York state estate tax exemption. 

What do New York residents need to know about the New York estate tax?

In this updated guide, we give you all the essential information you need to navigate these taxes. 


New York Estate Tax

Changes in federal estate tax laws may exempt you from paying taxes on your estate, but you may still owe tax dollars to New York State. 


What is an Estate Tax?

An estate tax is a tax levied on the value of a deceased person’s estate before it is distributed to their heirs. This tax is also sometimes called a death tax. 


New York Estate Tax Rate

The New York estate tax rate is not fixed. It ranges between 3.06% and 16%. For 2018, estates valued at more than $5.25 million are subject to this tax. For 2019, the basic exclusion is $5.74 million. 

The NY estate tax is graduated. The more your estate is worth, the more you’ll pay in estate tax. If a taxable estate is worth over $10.1 million, you’ll pay that 16% tax rate. 


Calculating Your Taxable Rate

Using the New York state estate tax exemption of $5.25 million, you can calculate your taxable rate. 

What is the value of your estate? For example, if your is worth $5.35 million, you would pay taxes on $100,000. 

On the other hand, if your estate is worth 105% of $5.25 million, you would pay an estate tax on the whole amount. 


Marital Deduction

Property left to a spouse is exempt from both the state and federal estate tax. There no restrictions. 

When the first spouse passes away, the surviving spouse owes no estate taxes. 

Note: This unlimited marital deduction is only applicable to American citizens. If your spouse is a non-citizen, this deduction does not apply. 


What are the New York State Tax Return Requirements?

New York residents who have acquired assets that exceed the exempt amount at the time of their death will have to have a New York estate tax return filed. 

Filing the return is required whether or not a tax will be imposed. Because of deductions, it is possible that a tax will not be imposed even when the estate is worth more than the exempt amount. 

Even if you are not a New York state resident but own real estate or other tangible property, you may owe New York state estate tax. 


Keeping Up With Tax Laws

Whether you are filing taxes for the first time or a seasoned veteran, you need to keep up with the federal and state tax laws. New York estate tax and other state tax rules can differ from those of the remaining 49 states.

Visit us with any tax-related questions. We’ve got you covered.