Gifting Strategies

State Death Taxes And Gift Taxes

The state you live in may levy a separate estate tax or inheritance tax and may also charge a state gift tax. Under the Economic Growth and Tax Relief Reconciliation Act, the federal credit for state death taxes has been phased out.  In 2005, it became a deduction. Depending on the laws in each state, this change could cause some estates to pay more in transfer taxes. This section covers federal taxes only, so check with your attorney or other estate planning professional about state tax issues when you have your estate plan done.