Under Article 4.1 of the Indiana Code, the state of Indiana currently taxes inheritances received by certain people. However, as of last week, the Indiana House has approved legislation to phase out Indiana’s inheritance tax, and the Senate voted to keep the tax but reduce its size and scope.
Under the current law, for the purpose of computing Indiana inheritance tax liability, exemption amounts and tax rates vary based upon different classes of transferees. Class A transferees, which are lineal ancestors or descendants, are entitled to a $100,000 exemption at rates ranging from 1%-10%. Class B transferees, which are brothers, sisters, nieces, and nephews, are entitled to a $500 exemption at rates ranging from 7%-15%. Class C transferees, a catch-all category, are entitled to a $100 exemption at rates up to 20%.
House Bill 1199, which is the bill approved by the Indiana House last week, would create a credit against inheritance tax owed starting in July 2014 until July 2024 when the inheritance tax would be eliminated. Senate Bill 293 would increase exemption amounts for all classes and would also cut the inheritance tax rate. This measure was approved unanimously by the Senate. It is likely that the legislation will go to a conference committee for both the Senate and the House to agree on a bill.
If you are contemplating an estate plan a experienced attorney at Gordon A. Etzler & Associates can help. Call today to make an appointment!
