No matter where you live in the United States, it’s important to be informed about the local rules and regulations, especially regarding Estate Planning. If you reside in Ohio, you may be wondering whether there is an imposed Estate Tax. Continue reading for more information and contact a Medina, Ohio Estate Planning lawyer today.
What is an Estate Tax?
An Estate Tax is a tax imposed on the fair market value of a deceased person’s assets before those assets are distributed to their heirs or beneficiaries. It is not a tax on the inheritance received by the beneficiaries, but rather a tax on the right to transfer property at death.
The tax is typically applied to the decedent’s taxable Estate, which includes all their property, such as real estate, bank accounts, stocks, bonds, business interests, and life insurance proceeds, minus certain allowable deductions like debts, funeral expenses, and administrative costs. Both the federal government and some state governments impose Estate Taxes, though each has its own exemption levels and rates.
An important component of the Estate Tax is the exemption amount. Estates valued below this threshold are typically exempt from the tax. Only the portion of the Estate’s value that exceeds the exemption is subject to the tax rate. This tax is generally paid by the Estate itself from the available assets before distribution.
Does OH Have an Estate Tax?
No, Ohio does not currently impose an Estate Tax. Ohio’s Estate Tax was formally repealed by the state legislature for individuals who passed away on or after January 1, 2013. Before the repeal, Ohio was one of several states that imposed a tax on the transfer of a decedent’s property.
The decision to eliminate the state Estate Tax was largely driven by a desire to make Ohio more competitive with other states that had already repealed or never instituted such a tax. The repeal aimed to reduce the tax burden on residents and potentially encourage wealthy individuals to remain or move to the state, increasing investment and economic activity. Since 2013, Ohio residents and their Estates have only been subject to the federal Estate Tax, given that the Estate value exceeds the much higher federal exemption threshold.
Do You Still Have to Pay Federal Estate Tax in OH?
Yes, Ohio residents may still be subject to the federal Estate tax, despite the fact that the state does not impose this rule. While Ohio repealed its own state-level Estate Tax, this repeal only affects the state tax liability. The federal government imposes a separate Estate Tax on the transfer of a decedent’s property, and this tax applies to all U.S. citizens, regardless of which state they live in.
However, the federal Estate Tax only applies to very large Estates. The tax includes a substantial basic exclusion amount, which is subject to annual adjustments for inflation. For deaths occurring in 2026, the first approximately $15 million of an Estate’s value is exempt from the tax. An Estate must exceed this threshold to incur any federal Estate Tax liability.
