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Old 07-02-2010, 12:04 PM
 
86 posts, read 127,739 times
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Hi

My partner and I are legally married in Connecticut, and are thinking about retiring early ( we are in our mid 50's). One of the areas we are considering is the Doylestown PA area. I recently read where PA has a hefty inheritance tax, that is exempt only for a spouse. Obviously our marriage would not be recognised in PA ( hopefully someday), so if anything were to happen to either of us, the other would be left with an onerous tax bill, and much less to live on. What have other gay couples living in PA done regarding this? Is there anyway around it?

thx!
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Old 07-02-2010, 01:54 PM
 
457 posts, read 1,179,747 times
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The inheritance tax for those not related directly is 15%.
Inheritance Tax

"an onerous tax bill" - wait until you move here. The inheritance tax is nothing. We are following in NY's footsteps.
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Old 07-02-2010, 02:29 PM
 
86 posts, read 127,739 times
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Quote:
Originally Posted by sr1234 View Post
The inheritance tax for those not related directly is 15%.
Inheritance Tax

"an onerous tax bill" - wait until you move here. The inheritance tax is nothing. We are following in NY's footsteps.
Thanks for the link. While we are used to the high taxes of Connecticut, the inheritance tax in PA of 15% is a killer. Not that we plan on going anywhere, but it is a burden for the surviviing person that a straight couple does not have to deal with!
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Old 07-02-2010, 03:10 PM
 
Location: Midwest transplant
2,048 posts, read 5,265,896 times
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Yes, and there's no exemption/exclusion/ceiling. It's 15% on your first dollar and last dollar. We just re did our wills this morning and found that our nieces will have to settle with the state before they get a dime. We may find another state in which to retire!
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Old 07-04-2010, 03:36 PM
 
200 posts, read 535,537 times
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Gay or straight, you're smart to think about inheritance taxes in Pennsylvania. I have seen a lot of internet and magazine surveys that say that Pennsylvania is a great place to retire. But they all leave out the inheritance tax issue. There's no way I'll stay in PA when I get old. Not if I want the kids to get what's left.
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Old 07-04-2010, 08:26 PM
 
783 posts, read 1,814,178 times
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Quote:
Originally Posted by NewEnglander62 View Post
Thanks for the link. While we are used to the high taxes of Connecticut, the inheritance tax in PA of 15% is a killer. Not that we plan on going anywhere, but it is a burden for the surviviing person that a straight couple does not have to deal with!

It is a killer. Remember that next time you go to the polls.
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Old 07-06-2010, 07:04 AM
 
Location: Montco PA
2,076 posts, read 4,381,233 times
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Quote:
Originally Posted by kanling View Post
Gay or straight, you're smart to think about inheritance taxes in Pennsylvania. I have seen a lot of internet and magazine surveys that say that Pennsylvania is a great place to retire. But they all leave out the inheritance tax issue. There's no way I'll stay in PA when I get old. Not if I want the kids to get what's left.

PA will only take 4.5% if you leave anything to your kids. The way they see it, 4.5% is a small price to pay for receiving the benefit of paying only 3.07% each year in earned and investment income (and not paying any taxes on pension/IRA/social security income).
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Old 07-07-2010, 05:06 AM
 
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7.57% effective tax rate is pretty bad for state taxes if you are a saver. You can stay. I won't.
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Old 07-07-2010, 06:57 AM
 
Location: Montco PA
2,076 posts, read 4,381,233 times
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Quote:
Originally Posted by kanling View Post
7.57% effective tax rate is pretty bad for state taxes if you are a saver. You can stay. I won't.
You're comparing apples to oranges here. 3.07% is paid yearly on income, while the 4.5% is paid on everything left to your kids when you die. There's no "effective" rate of 7.57%.

I'm not sticking up for the 4.5%. At a minimum, PA should institute a large exemption that mirrors the Federal exemption. Of course with the economy the way it is, this won't happen anytime soon. Plus there's always pressure to reduce PA's onerous business taxes which IMO have a far more negative impact on our economy than the inheritance tax.
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Old 07-07-2010, 07:31 PM
 
200 posts, read 535,537 times
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I agree that there really should be a floor on the inheritance tax. I'm pretty sure that Pennsylvania is the only state that has an inheritance tax that applies to everybody, even the borderline poor. And a big yes on the business taxes! It is no surprise that only "old" companies are based in PA with very few new ones coming in. The surprise is that so many old ones choose to stay.

On the tax rate, yes they are different... but also the same. If you earn an extra $100 in one year, you will pay $3.07 in state tax on it. If you keep it, or use it to buy some property, then die, you (or your children, really) will have to pay an additional $4.50 to keep it. So, that is genuinely $7.57 tax paid on $100 extra earned. Spend it on clothes and then it is only $3.07.

I do like that PA's income tax is 3.07% flat. But, where I live there is also the township 1.3% income tax. And the very high school and property tax. So overall, the total taxation is maybe only a bit lower than when I lived in Maryland.
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