Pennsylvania inheritance tax planning

Pennsylvania has no state estate tax and no state gift tax. This is the number that actually matters for families here.

Surviving spouse

4.5%

Lineal heirs

12%

Siblings

15%

Everyone else

Last reviewed: 14 August 2026

The short answer

Pennsylvania taxes what each beneficiary receives, based on their relationship to you, with no exemption threshold (72 P.S. § 9116). A surviving spouse pays 0%. Lineal heirs pay 4.5%. Siblings pay 12%. Everyone else pays 15%. The tax applies from the first dollar, which means even modest estates generate real liability when the beneficiaries are in the higher classes.

Why this is the wrong thing to ignore

National estate planning content is preoccupied with probate avoidance and the federal estate tax. For the overwhelming majority of Pennsylvania families, neither is the binding constraint. The federal exemption is high enough that most estates never approach it, and Pennsylvania probate is not the expense that content assumes.

Inheritance tax is what actually shows up. It has no floor, it is charged on nearly everything, and the rate turns entirely on who you leave things to.

What reduces it, and what doesn’t

What actually reduces it

Titling and beneficiary structure

Who receives what, and how, changes the rate applied.

Life insurance

Proceeds on the life of the person who died are generally exempt. For estates passing to 12% or 15% beneficiaries, insurance can fund the tax bill itself.

Charitable bequests

Transfers to qualifying charities are exempt.

Lifetime gifting

Pennsylvania has no state gift tax, though transfers within one year of death receive particular scrutiny.

Irrevocable trusts funded more than a year before death

May be excluded in some circumstances (72 P.S. § 9107), depending on retained interests and powers. Drafting matters enormously.

The family business exemption

Qualifying closely held businesses may pass exempt where conditions on size and recipient class are met.

The 5% early payment discount

Not planning exactly, but real money.

What does not reduce it

A revocable living trust.

This is worth repeating because it is the most common and most expensive misunderstanding I encounter. Assets in a revocable trust remain part of your taxable estate for Pennsylvania inheritance tax purposes. The trust may be excellent for other reasons. This is not one of them.

What a trust is actually good for

Questions I get about this

Find out what your beneficiaries would owe

Bring your beneficiary list and a rough asset picture. Fifteen minutes usually shows whether there is a lever worth pulling.