Pennsylvania is one of the few remaining states that still collects an inheritance tax: a tax levied on what you leave behind to family when you die, separate from federal estate tax. For PA, the tax rates range from 0 to 15% depending on your relationship to the deceased.
PA collected $1.7 billion in inheritance tax during FY 2024–2025 (3.7% of the state's $46.4 billion total revenue). For context, PA collected $14.7 billion in sales tax and $7.5 billion in corporate net income tax for the same period.
If you inherit your parents' $400K home in PA, you will owe the state $18,000 before you can take ownership. This page breaks down how it works, what it costs real families and what you can do about it.
How PA Inheritance Tax Works
Pennsylvania's inheritance tax is a tax on the right to receive property from a deceased person's estate. Unlike a federal estate tax, which taxes the estate itself, PA's inheritance tax is imposed on each individual beneficiary, based on their relationship to the decedent.
Pennsylvania is one of only a few remaining states that still levy an inheritance tax. The tax applies to all property owned by a PA resident at death, including real estate and tangible personal property located in PA regardless of where the owner lived.
PA inheritance tax is assessed on nearly all assets a decedent owned or controlled at death. It applies to real estate, bank accounts, brokerage accounts, vehicles, business interests, and in many cases retirement accounts like IRAs and 401(k)s.
Key distinction
The PA inheritance tax is not the same as the federal estate tax. Most estates in PA owe no federal estate tax (federal exemption is over $13 million per person as of 2024), but may still owe PA inheritance tax even on modest estates.
Tax Rates by Relationship
| Relationship | Tax Rate | Notes |
|---|---|---|
| Surviving Spouse | 0% | Exempt |
| Charitable Organizations | 0% | IRS-qualified charities |
| Children, Grandchildren, Parents | 4.5% | Direct lineal descendants/ascendants |
| Siblings | 12% | Brothers and sisters |
| All Other Heirs | 15% | Nieces, nephews, friends, non-relatives |
Early payment discount
If inheritance tax is paid within 3 months of death, Pennsylvania offers a 5% discount on the total tax owed. This means a direct descendant effectively pays 4.275% instead of 4.5% on inherited assets.
What Assets Are Subject to Tax?
PA taxes most assets owned at death. This includes:
- → Real estate (primary residence, rental properties, land)
- → Bank and brokerage accounts held in decedent's name
- → Vehicles titled in decedent's name
- → Business interests and partnership shares
- → IRAs and 401(k)s — only if the decedent was under age 59½ at death (the "availability rule")
- → Jointly held property — 50% of the value for property held with rights of survivorship
The availability rule
IRAs and 401(k)s are only taxed if the decedent could have accessed the funds penalty-free at the time of death. If they were under age 59½, the accounts are considered "not available" and are exempt from PA inheritance tax. If they were 59½ or older, the full account value is taxable.
Filing and Payment Deadline
The PA inheritance tax return (Form REV-1500) must be filed within 9 months of death. Payment is also due at this time. If the full tax is paid within 3 months, a 5% discount applies.
Estates are typically settled over 12–18 months or longer when real estate, business interests or disputes are involved. The 9-month deadline often arrives before illiquid assets can be sold, creating cash-flow problems for executors.
Inheritance Tax: Revealed Reality
- → Regressive The 4.5–15% rates hit middle-class families harder than wealthy estates (who use trusts, life insurance, charitable structures, etc. to minimize exposure). Wealthy estates have liquidity and planning; working families don't.
- → Asset Liquidator Family farms, small businesses, homes: these may need to be sold under time pressure to cover the tax. That's the opposite of building generational wealth in working communities.
- → Unfocused Death Tax If you want to tax inherited wealth, you would have a high exemption threshold (like the federal estate tax's $13M+). PA's inheritance tax has no exemption, it starts at dollar one. This targets modest estates while wealthy estates plan around it
- → Outlier One of only 5 states. This isn't progressive policy; it's a historical relic. Most states have repealed theirs because the policy doesn't work.
The Liquidity Problem
Knowing what an estate owes is one thing. Having the cash to pay it, within 9 months of someone's death, is another problem entirely.
Consider a typical estate where:
- ✕ Brokerage accounts could be frozen during estate administration
- ✕ The house hasn't sold and may not on the market for months
- ✕ IRAs have named beneficiaries and pass outside the executor's control
- ✕ Collectibles, art or business interests haven't been appraised or liquidated
The estate may still be owe thousands of dollars (or more) without having the funds to pay and the total tax bill is due in 9 months regardless.
The mismatch
Typical estates take 12–18 months to settle, often longer when real estate, business interests or disputes are involved. PA inheritance tax is due 9 months after death. That gap is not a technicality; it's a real cash-flow crisis for executors and families who aren't prepared.
Where Does the Money Come From?
Executors facing this situation typically have a few options:
- → Estate line of credit or loan Some banks offer short-term estate loans, but these require executor authority and take time to arrange.
- → Partial liquidation Selling accessible assets (a car, savings bonds, a smaller account) to generate cash before larger assets are settled.
- → Beneficiary contribution In some cases, beneficiaries pool personal funds to cover the tax, expecting reimbursement from the estate when assets are eventually sold.
- → Life insurance proceeds If the decedent held a life insurance policy with the estate (not a person) as beneficiary, those proceeds can be used. Policies with individual named beneficiaries pass outside the estate and are not typically available to the executor for tax payment.
Liquidity planning
Make sure cash or easily converted assets will be available to pay the tax on time. This is as important as knowing the total tax that may be owed based on the various rates. Talk to your financial planner about whether your estate has enough accessible assets to cover the 9-month deadline without forcing a rushed sale or a loan.
Estimate Your Tax
Enter the value of assets going to each type of beneficiary. The calculator shows the tax for each relationship and the total tax owed.
| Beneficiary Relationship | Tax Rate | Asset Value | Tax Owed |
|---|---|---|---|
| Spouse / Charity | 0% | $0 | |
| Child / Grandchild / Parent | 4.5% | $0 | |
| Sibling | 12% | $0 | |
| Other Heirs | 15% | $0 | |
| Total PA Inheritance Tax | $0 | ||
This is a simplified estimator for educational purposes. It does not account for exemptions, jointly held property, all asset types and other real world financial structures.
Consult a professional for accurate figures.
Real World Examples
These scenarios demonstrate how PA inheritance tax applies in different situations. Asset values are for illustration only. Actual tax depends on appraisals, account types, titling and relationship documentation.
House → Son
Tax rate: 4.5% (direct descendant)
Calculation: 0.045 × $250,000 = $11,250
Brokerage Account → Out-of-State Sibling
Tax rate: 12% (sibling)
Calculation: 0.12 × $35,000 = $4,200
Car → Daughter (Title Matters)
Title in father's name only:
Tax owed: $900 (4.5% × $20,000)
Joint w/ survivorship (father + daughter):
No inheritance tax
Joint w/o survivorship:
Tax on father's share only
IRA → Daughter (Age Matters)
Tax rate: 4.5% (direct descendant)
Calculation: 0.045 × $400,000 = $18,000
Note: Roth or Traditional makes no difference for PA inheritance tax, both are taxed if decedent was 59½ or older.
Verify with your estate planner.
These examples are illustrative. Asset titling, account type, asset location and relationship documentation all affect the actual tax calculation. Do not rely on these scenarios for filing decisions.
Call Your Legislator
Phone calls are the most effective way to influence a state representative. A 60-second call from a constituent carries more weight than an email or petition signature. Here is a quick call script example to get you started.
Sample Phone Script
Find your legislator
Visit PA General Assembly and enter your address. You'll get contact info for both your state House and Senate representatives.
Call your House rep first, that's where these bills reside.
The Bills
HB 1394
HB 2066
Why these bills matter: PA collected over $1.7 billion in inheritance tax in FY 2024–2025. That revenue comes at the cost of forcing families to liquidate businesses, sell homes under time pressure and pay tax on wealth already taxed during a lifetime. Repealing or phasing out this tax keeps capital in PA families and businesses instead of extracting it at the worst possible time.
Other Ways to Help
Sign the petition: Add your voice to the Change.org petition to repeal PA inheritance tax.
Share this page: The more people who understand how this tax works, the harder it is for legislators to ignore it.
Resources & Links
HB 1394 - Proposes full elimination of PA inheritance tax. HB 2066 - Companion bill proposing full repeal of PA inheritance tax. Status as of 2025 - Bills introduced and referred to committee.