Arizona Estate Taxes

The Arizona estate and generation-skipping transfer tax provisions are permanently repealed, and an Arizona personal income tax subtraction is allowed for federal estate taxes paid, applicable to taxable years beginning after December 31, 2005.

Because the Arizona estate and generation-skipping transfer taxes were based on the allowable federal tax credit for state death taxes, and the federal credit was phased out from 2002 through 2005, the Arizona taxes were phased out from 2002 through 2005. The state statutory provisions are now being permanently repealed.

The amount of any federal estate taxes paid in the current taxable year may be subtracted from Arizona gross income in computing the Arizona taxable income of an estate. While no estate tax is owed on the estate of a person who dies after 2004, estate tax owed on the estate of a person who died before 2005 could possibly have been collected through March 31, 2006 (because the return filing deadline was nine months after a person's death, and the filer could have been granted a six-month filing extension).