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Making Sense of New York’s Estate Tax “Cliff”

Future Wealth Navigator

In addition to the federal estate tax, which may be levied upon a decedent’s estate, New York imposes a separate state estate tax regime. Generally a decedent’s estate is subject to the New York State estate tax if such decedent dies a resident of New York, or if the decedent dies a non-resident but leaves behind real or tangible property physically present in the state.

Before legislation was passed in 2014, New York had a one-million-dollar exclusion amount (that is, estates would only be liable for State estate tax if the New York taxable estate was greater than one million dollars). If an estate was subject to the New York estate tax, the tax would only be charged against the portion of the estate exceeding the exclusion amount—meaning that before the new legislation went into effect, the first one million dollars was exempt of any State estate tax.

Effective April 1, 2014, New York reformed the way it taxes estates. In addition to modifying the estate tax brackets, the State nearly doubled its estate tax exclusion from one million dollars to $2,062,500, with gradual increases annually until January 1, 2019, when the exclusion amount would reach $5.25 million. Each year, thereafter, the exclusion amount increased based on inflation. 

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