No More Tennessee Inheritance Tax

No More Tennessee Inheritance Tax

estate planning lawyer, tennessee inheritance taxAs of January 1, 2016, the Tennessee inheritance tax is repealed. What this means is that families of persons who pass away in 2016 or later will not owe any Tennessee inheritance taxes. Looking forward, estate planning in Tennessee, in many cases, will be simplified because there will no longer be a need to develop strategies to avoid the Tennessee inheritance tax.

Do I need to make changes if I already have estate planning documents in place?

Probably not, but you can simplify your current documents to eliminate language that is unnecessary now that the tax has been eliminated.

Is there a federal inheritance tax?

Yes. For 2016, the federal estate tax exemption is $5,450,000 per person, meaning that families are not taxed unless the estate of the deceased family member exceeds that amount.  A married couple will therefore have an exemption of $10.9 million between them.

Tennessee Inheritance Tax Question?

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Change to the Tennessee Inheritance Tax Proposed

Change to the Tennessee Inheritance Tax Proposed

Governor Bill Haslam and Republican leaders in the state legislature have proposed changes to the Tennessee Inheritance Tax as discussed recently in an article in The Tennessean (see full article here).  The current Tennessee Inheritance Tax Exemption amount is $1 million with inheritance tax rates ranging from 5.5% – 9.5%.  The proposal would raise the exemption to $1.25 million and will continue to raise the exemption incrementally over the next several years to $5 million.  The current Federal Estate Tax Exemption amount is also $5 million.

The cut in inheritance tax would cost the state of Tennessee approximately $14 million a year and is paired with a proposal to a reduction in state sales tax on food.  Democrats have expressed little opposition to cutting both taxes.  Haslam plans to cover the tax loss with rising revenue from other taxes.

The change to the Tennessee Inheritance Tax would keep wealthy residents from leaving Tennessee and avoid the sale of family businesses to pay death taxes.