4/09/2014

Estate tax rate in New York State is as high as 164 percent

I suspect that there are a few more people who will be leaving New York.  From CNBC:
Certain estates could even wind up with a tax rate of 164 percent on portions of their estates, according to one tax expert. . . .  
On its face, the new law seems like tax relief. Under the previous law, New Yorkers paid estate taxes of 3.06 percent to 16 percent on the value of estates over $1 million. The new law raises that exclusion to $2.062 million this year and gradually increases it to more than $5 million by 2017. 
But because the law also phases out certain credits related to federal taxes, people who have estates valued just above the $2 million threshold could get massive estate tax bills. An analysis by U.S. Trust found that a New York resident who dies today with a taxable estate of $2,165,625 could have to pay an estate tax of over $112,050. That represents a tax of over 100 percent on the value of the estate over $2,062,000. 
It gets worse in a few years. Matz said that assuming that the exclusion rises to $5,250,000, a New Yorker with a taxable estate of $5,512,500 would have to pay an estate tax of $430,050. That's a marginal tax rate of 164 percent on the value of the estate above the exclusion. . . . .  
Matz, however, said the issue is not just a problem for the so-called rich. When you add up the value of property, pension plans, 401(k) plans and other assets, a New Yorker with just over $2 million in New York "is not exactly super rich. In a state with a high cost of living, that's not that unusual."

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