What is the Estate Tax in New York?

estate tax new york

When a person dies, the federal government and the state of New York may subject their assets to an estate tax depending on whether they exceed certain thresholds. For more information on the estate tax in New York, please keep reading, then contact an experienced Putnam County estate planning attorney today.

How does the estate tax work in New York?

For tax purposes, both federal and state tax collectors assess these levies based on the estate’s fair market value, rather than the amount the deceased originally paid for their assets. Anything in the estate that the decedent bequeaths to a surviving spouse does not count toward the total amount of the estate and does not become subject to estate tax. In the Empire State, any part of an estate that exceeds $6,110,000 will face estate taxes, whereas the federal threshold is $12.06 million. If the fair market value of the estate does not exceed that amount, it will not become subject to estate taxes.

What is the estate tax rate in New York?

The Empire State employs the following rate for estate taxes:

  • $0 to $500,000: 3.06 percent of the taxable estate
  • $500,000 to $1,000,000: $15,300 plus 5.0 percent of the excess over $500,000
  • $1,000,000 to $1,500,000: $40,300 plus 5.5 percent of the excess over $1,000,000
  • $1,500,000 to $2,100,000: $67,800 plus 6.5 percent of the excess over $1,500,000
  • $2,100,000 to $2,600,000: $106,800 plus 8.0 percent of the excess over $2,100,000
  • $2,600,000 to $3,100,000: $146,000 plus 8.8 percent of the excess over $2,600,000
  • $3,100,000 to $3,600,000: $190,800 plus 9.6 percent of the excess over $3,100,000
  • $3,600,000 to $4,100,000: $238,000 plus 10.4 percent of the excess over $3,600,000
  • $4,100,000 to $5,100,000: $290,800 plus 11.2 percent of the excess over $4,100,000
  • $5,100,000 to $6,100,000: $402,800 plus 12.0 percent of the excess over $5,100,000
  • $6,100,000 to $7,100,000: $522,800 plus 12.9 percent of the excess over $6,100,000
  • $7,100,00 to $8,100,000: $650,800 plus 13.6 percent of the excess over $7,100,000
  • $8,100,000 to $9,100,000: $786,800 plus 14.4 percent of the excess over $8,100,000
  • $9,100,000 to $10,100,000: $930,800 plus 15.2 percent of the excess over $9,100,000
  • $10,100,000 and higher: $1,082,800 plus 16 percent of the excess over $10,100,000

How do you minimize estate taxes in New York?

To minimize estate taxes, you need to keep the planning simple and the total amount of the estate below the threshold. That is easy for most families. Setting up trusts that facilitate the transfer of wealth can help ease the tax burden for those with estates and inheritances above the threshold. You can use an intentionally defective grantor trust, a type of irrevocable trust that allows a trustor to isolate certain trust assets so as to separate income tax from estate tax treatment on those assets, in order to reduce your estate tax exposure. Additionally, if you own a life insurance policy, your survivors can use the proceeds of said policy to reduce the estate taxes. One way to prevent an insurance policy from being lumped into one’s estate is to transfer ownership to another person or entity, including the beneficiary.

Speak with Andres D. Gil, Esq. if you have any further questions.

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If you or a loved one needs assistance creating an estate plan, contact the Law Office of Andres D. Gil, PLLC today.

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