Klenk Law

Please Explain the Pennsylvania Inheritance Tax!

Posted on Fri Jun 27, 2014, on Probate and Estate Administration

From Our “Ask a Question” mailbag: “Can you explain the Pennsylvania Inheritance Tax?”

Most recently updated June 22nd, 2018

Explain the Pennsylvania Inheritance Tax

Explain the Pennsylvania Inheritance Tax.

“My father died recently in Philadelphia, and I have been reading about the Pennsylvania Inheritance Tax. I am confused. Can you explain the Pennsylvania Inheritance Tax?”

Goal: Explain the Pennsylvania Inheritance Tax for Non-Lawyers.

Whenever I am helping my Pennsylvania clients with estate planning or working with the executor of a Pennsylvania estate, I have the opportunity to explain how the Pennsylvania Inheritance Tax works.

First, let’s break the tax down to its roots. The Pennsylvania Inheritance Tax is a Transfer Tax. It is different from the other taxes which you might pay regularly, like income tax, real estate tax or sales tax. A transfer tax is a tax levied when one owner transfers an asset to another. In this case, the transfer tax is taxing the transfer from the deceased to the beneficiary. You have paid transfer taxes in the past if you have ever bought a house or a vehicle with a title. To get the deed or title transferred you paid a fee to the state or county…a transfer tax.

The Pennsylvania Inheritance Tax is a transfer tax on the transfer of assets from the deceased Pennsylvanian (or someone with Pennsylvania real estate) to the new owner. It does not matter if the transfer is through a will, by beneficiary designation, through a revocable living trust or payable on death account. The tax is triggered when one person dies who owned or controlled an asset, and the asset then passed to someone else, typically called the beneficiary.

Pennsylvania Inheritance Tax Forms

  • Form REV-1500: If the deceased was a Pennsylvania resident, the executor must file a PA Form Rev-1500 on or before nine months after the date of death. If you pay the tax within this nine-month period, there will be no interest due.  But, if the payment arrives after nine months, the Pennsylvania Department of Revenue will charge interest and may levy a penalty.
  • Form Rev-1737: If the deceased was a non-Pennsylvania resident but owned real estate in Pennsylvania, the executor need file a PA Form Rev-1737 on or before nine months after the date of death. If you pay the tax within this nine-month period, there will be no interest due.  But, if the payment arrives after nine months, the Pennsylvania Department of Revenue will charge interest and may levy a penalty.

Pennsylvania Inheritance Tax Rates

Unlike most other states, the Pennsylvania Inheritance Tax rates are not the same for every beneficiary. The rate that you will pay depends upon your relationship to the person who died.

  • 0% Tax Rate: Surviving spouses, charities and transfers to the government are exempt from the Pennsylvania Inheritance Tax. The probate process might require a tax return filed, but the result will be no tax due if the entire estate passes to only exempt beneficiaries.
  • 4.5% Tax Rate: Transfers to grandparents, parents, descendants (which include adopted and step-descendants) are subject to a 4.5% inheritance tax. This group is known as “Class A.”
  • 12% Tax Rate: Transfers to siblings, half-siblings by blood or adoption (but not step-siblings) are subject to a 12% inheritance tax. This group is known as “Class A1”.
  • 15% Tax Rate: Transfers to any person not mentioned above, such as close friends, neighbors or even long-term significant others are subject to a 15% inheritance tax. This group is known as “Class B.”

You can see why the LGBT community was concerned about marriage for tax purposes, as a gift to a spouse is taxed at 0% but a person with whom you have lived with for decades pays at 15%. This same tax problem faces same-sex couples that may have been living together and even raising children together. Getting married might have some costs, but it has tax savings also!

Exemptions from the Pennsylvania Inheritance Tax

The Pennsylvania Inheritance Tax exempts some assets.

  • Family Farm Exemption: If the deceased’s farm falls into a specific category, the land can pass free of the Pennsylvania Inheritance Tax:
  • The farmland must transfer from the deceased to one of the deceased’s family.
  • The land must continue to be devoted to agricultural business for at least seven years.
  • The farmland must produce an annual gross income of at least $2,000.
  • Life Insurance Exemption: Life insurance payments on the life of the deceased are exempt from the Pennsylvania Inheritance Tax. It does not matter if they pass to the estate or directly to the beneficiary.

Deductible Expenses:

The Pennsylvania Inheritance Tax is levied on the fair market value of the deceased’s assets, but the gross number is reduced in two ways.

  • Deductions for Estate Expenses: The Pennsylvania Department of Revenue allows you to deduct expenses that were incurred while administrating the estate. Typical examples include the executor’s fees, the probate lawyer’s fees, filing fees at the Register of Wills and funeral expenses.
  • Deductions for Debts of the Descendant: The Pennsylvania Department of Revenue also allows deductions for the deceased’s debts that the executor subsequently paid. Typical examples are credit card bills, mortgages and income tax payments to the IRS or the Department of Revenue.

Preparing the Pennsylvania Inheritance Tax Return

The Probate Attorney typically prepares the Inheritance Tax Return. An accountant can prepare the return, but many accountants are unfamiliar with the return. A typical arrangement for an estate is that the accountant prepares the deceased’s final income tax returns while the probate lawyer files the inheritance and estate tax returns.

The Probate Attorney’s understanding of estate and inheritance tax returns reduces the estate’s overall costs. An experienced probate team will be assembling and gathering the data necessary for the return. Collecting this information at the same time as the assets are more efficient.

Probate Questions?

The inheritance tax return is part of the overall probate process.  If you have more probate questions, please read my more detailed article, Probate Process: All You Need to Know.

In Conclusion: Please Explain the Pennsylvania Inheritance Tax!

I hope that this article was helpful in explaining how the Pennsylvania Inheritance Tax Works. If you have any other questions, please feel free to contact me for a free consultation.

Let our probate lawyers help walk you through the confusing probate process. If you have more questions, please call to speak to one of our experienced probate lawyers.  Our lawyers are ready to answer your questions. Further, I included links to even more detailed information on my website. So, let me know how I did, comments and questions are welcome!

Furthermore, I would be happy to answer your questions.  If you have any other matters feel free to contact our office for a free consultation. We try to make the process as painless as possible!

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do

Will after it is filed

Peter Klenk, Probate Lawyer


Inheritance Tax, Pennsylvania, Pennsylvania Inheritance Tax rates, Peter Klenk, Probate, Probate Attorney, Probate Lawyer

What Our clients are saying


Peter provided outstanding advice and preparation of a will and trusts.


Peter was excellent. He explained everything very clearly and is super friendly. My wife and I originally tried using a lawyer through group legal coverage, but unfortunately the old adage - "you get what you pay for" - applied to the other lawyer, and we decided to go with a real professional.


When it came down to picking the right attorney to handle my affairs, I knew right away it was this firm. From speaking to their secretary to speaking to Peter I knew I was making the right decision. After only a few mins Peter knew right away what I was looking for and handled all my questions professionally and even gave me great feedback that put my mind at ease. All that without even giving a single penny! So of course I hired him! So far so good...


AWESOME LAWYER! Peter Klenk is an exceptional attorney and a very nice person! Today I spoke with Peter about estate planning and was impressed with by his professionalism, cordiality, and attention to detail. I highly recommend Klenk Law for probates, wills, trusts, and other issues germane to estate planning!


Great friendly staff


Tremendous firm with bright, kind and tenacious people. Great representation for our family.


I'm totally satisfied with Klenk Law. Peter has a great legal mind with the personality of the guy next door.


Everything about my experience was a 10+! Peter and his staff made what I thought would be a difficult process easy and understandable. Every detail was handled correctly. No other firm could possibly do better than Klenk Law!


Peter and his staff are very responsive and always willing to help my clients and in a cost efficient manner.


Like another reviewer, I contacted Peter through his website using the free consultation link, for a question regarding PA inheritance taxes. The question was quite technical and difficult to explain, and the answer was nowhere to be found on the web. Peter grasped precisely what I was asking, and provided a clear, helpful response (with a touch of humor) the very next day.


Answered my question quickly and referred me to a colleague that could handle my problem


Mr. Klenk, quickly understood the circumstances presented and provided clear and concise advice. This advice provided me with the information I required to progress the case to my advantage.


Peter is excellent. I had a very complicated situation with my parents' estate planning and potential Medicaid needs. Peter was very knowledgeable in estate planning matters, able to define the best solution for the situation. Additionally, he was congenial and able to communicate effectively to my senior citizen parents the benefits of estate planning. He earned my trust, and more importantly, my parents' trust in a 45 mins consultation period. Highly recommend Peter. He is very easy to work with.


Peter recently gave a presentation about Wills & Trusts at my employer, and it was fantastic! He was extremely knowledgeable and provided valuable information to the group. People were very engaged and asked several questions, all of which Peter thoroughly answered. Personally, my husband and I have selected Peter to help us with our estate planning, and he has been very helpful in providing us with all of the information we need to provide a secure future for our family. Thank you, Peter!


Peter provided outstanding advice and preparation of a will and trusts.


Peter explained things in a way that was easy to understand. Everything was done in the time frame he said it. Could not have been better!


You & your staff are the best thank you for everything.


Peter and his staff handled all of our needs in a very professional and timely matter.


Peter Klenk made a complex subject understandable and allowed us to move forward with our estate planning. He was patient with our questions and creative in the solutions he proposed.


Peter explained a complex subject very clearly, helped us to decide the best approach to managing our estate and then made it very easy for us to execute the required documents. He will be a valuable resource for years to come and clearly has a great understanding of estate law that will lead to innovative solutions for us. I would unhesitatingly recommend him for estate planning.


Fantastic customer service. Very personable and most importantly they provide great explanations of what is required based on your individual needs. Highly recommend Klenk Law for anyone that needs to create a will and estate documents.


Always professional and very responsive. Everyone on the staff that I have worked with. I look forward to continuing our relationship.


Surprisingly easy


Affable...yet surprisingly cerebral estate planning atty. High marks all the way around.


Peter and his associates made things easy for us.

Let us put our expertise to work for you.

Free consultation within 24 hours.