Changes to New York State Estate Tax

Written by: Martin X. Shields

Beginning April 1, 2014 New York state estate tax was changed from having an exclusion amount of $1 million per person to $2,062,500 per person.   This exclusion amount will continue to increase as shown in the table below until it is aligned with the federal exemption amount.

Time Period	NYS Estate Tax Exemption Amount
Prior to April 1, 2014	$1,000,000
4/1/14 – 4/31/15	$2,062,500
4/1/15 – 3/31/16	$3,125,000
4/1/16 – 3/31/17	$4,187,500
4/1/17 – 12/31/19	$5,250,000
1/1/19 and Thereafter	Federal Exemption Amount

 

Any personal property outside of New York state is excluded from this amount and the inheritance tax ranges from 3.06% to 16% for estates over $10,000,000.

The new law also adds a limited 3-year look back period for gifts made between April 1, 2014 and Jan. 1, 2019.  Specifically, if a NY resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the NY estate tax.

The New York generation-skipping transfer tax has also been repealed, meaning that New York will not impose a generation-skipping transfer tax on outright gifts to persons who are two or more generations below the transferor.

The one caveat to remember with New York State inheritance tax is if you are more than 5% over in personal exemption amount, the full amount of the estate is taxed and there is no exclusion amount.  For example, in 2017, when the exempt amount will be $5.25 million, the estate of someone who dies with an estate equal to the exempt amount would pay no tax. But someone who leaves an amount that’s five percent over the exempt amount ($5,512,500) would owe New York estate tax of $430,050. In other words, there’s a $430,050 tax on the extra $262,500.