Ind. Inheritance Tax Going Away In 9 Years
(Indianapolis, Ind.) – Indiana governor Mitch Daniels signed a bill into law which will phase out the state’s so-called “death tax.”
Senate Enrolled Act 293 will phase out Indiana’s inheritance tax over nine years starting in 2013. Indiana is the only state that does not exempt direct descendants’ children and grandchildren from paying the inheritance tax.
State Rep. Jud McMillin (R-Brookville) co-sponsored the legislation that will allow individuals who have acquired savings and assets to pass them on to their descendants without tax.
“This bill will make Indiana a more attractive place to live, work, and raise a family,” said McMillin. “Now, parents and grandparents who have worked their whole lives to build up businesses and farms will not be penalized if they want to pass that business or farm onto their children or siblings.”
The law will raise the exemption in 2012 for Class A transferees, children and grandchildren.
It could be a big savings for Hoosiers come inheritance time. Previously, Indiana’s inheritance tax rate can range from one percent to as high as 20 percent, the highest of any state in the nation.
“These hard working families will no longer have to sell off land or capital just to pay for the death tax,” said Rep. McMillin, adding that the law will also help Indiana retain its senior citizens who flock elsewhere to avoid the tax.
Indiana’s neighboring states, Michigan and Ohio, do not have inheritance taxes, and Kentucky does not tax on transfers to children.
The bill would raise the Class A exemption in year one and phase out the Indiana Inheritance Tax over the next nine years starting in 2013. It phases out inheritance tax replacement amounts payable to counties over 10 years. Every year, incremental reductions of approximately $14 million would be removed from the State’s inheritance tax revenue.
The bill, once fully phased in, is estimated to keep as much as $165 million in the pockets of taxpayers each year, McMillin said.