Indiana Estate Taxes
Indiana has a layered inheritance tax system. The amount of tax imposed depends on who gets what after you are gone, according to the following classes of beneficiaries:
- Surviving spouse: Transfers to a surviving spouse are totally exempt from tax.
- Class A: This class may include a lineal descendant, legally adopted child, parent of a legally adopted child, and the descendant of an adopted child. When somebody acts in the place of a parent (referred to in Latin as in loco parentis) for 10 years or more, a child is considered adopted if the relationship began before the child's 15th birthday. After a $100,000 per transferee exemption, members of this class are taxed according to the rates in the table below.
- Class B: The members of this class of beneficiaries may include a brother, sister, descendant of brother or sister, a son's wife or widow, and a daughter's husband or widower. Each beneficiary in this class gets a $500 exemption from tax. Transfers above this amount are taxed per the table below.
- Class C: All others not specifically mentioned above are lumped in under this class. Beneficiaries in this category get a maximum exemption of only $100, with the rest being taxed as indicated in the table that follows.
| Indiana Inheritance Tax Rates |
| Value of Property Passing to Class |
Class A Tax on Col. (1) |
Class A Rate on Excess |
Class B Tax on Col. (1) |
Class B Rate on Excess |
Class C Tax on Col. (1) |
Class C Rate on Excess |
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
| $0 |
$25,000 |
$0 |
1% |
$0 |
7% |
$0 |
10% |
| $25,000 |
$50,000 |
$250 |
2% |
$1,750 |
7% |
$2,500 |
10% |
| $50,000 |
$100,000 |
$750 |
3% |
$3,500 |
7% |
$5,000 |
10% |
| $100,000 |
$200,000 |
$2,250 |
3% |
$7,000 |
10% |
$10,000 |
15% |
| $200,000 |
$300,000 |
$5,250 |
4% |
$17,000 |
10% |
$25,000 |
15% |
| $300,000 |
$500,000 |
$9,250 |
5% |
$27,000 |
10% |
$40,000 |
15% |
| $500,000 |
$700,000 |
$19,250 |
6% |
$47,000 |
12% |
$70,000 |
15% |
| $700,000 |
$1,000,000 |
$31,250 |
7% |
$71,000 |
12% |
$100,000 |
15% |
| $1,000,000 |
$1,500,000 |
$52,250 |
8% |
$107,000 |
15% |
$145,000 |
20% |
| $1,500,000 |
and above |
$92,250 |
10% |
$182,000 |
15% |
$245,000 |
20% |
Indiana also has an estate tax that is intended to absorb the maximum credit against the federal estate tax. The amount of the tax is equal to the excess (if any) of the amount of the maximum credit above the aggregate of all inheritance and estate taxes paid to all states or territories.
Deductions for resident decedents. The following items can be deducted from a resident decedent's estate when calculating Indiana estate tax liability:
- decedent's debts claimed against the estate
- taxes on realty within the state which are subject to Indiana inheritance taxes and which were liens at the date of death
- taxes on personal property located within the state and subject to Indiana inheritance taxes which were personal obligations or were liens at the time of death
- income taxes on income to date of death
- funeral expenses
- memorial costs (not to exceed $1,000)
- commissions of executors, administrators and trustees
- administration expenses, including reasonable attorneys' fees (excludes expenses of administering property not subject to Indiana inheritance taxes
- inheritance or estate taxes paid to other states on intangible personal property which is subject to Indiana inheritance taxes (but not the federal estate tax)
- family allowance (currently $25,000)
- mortgages and special assessments on real property located within the state and subject to inheritance taxes (deductible from value of property)
- bequests to or for the use of a municipally owned cemetery, a church-owned cemetery, or a nonprofit cemetery corporation or association (generally exempt from tax)
Deductions for nonresident decedents. If the decedent was a nonresident of Indiana, the only deductions allowed from the estate are taxes (other than the federal estate tax), any other liens against the property to which the transfer relates, and the expenses of administering the property subject to Indiana inheritance taxes. However, if the assets in the decedent's home state estate are insufficient to discharge the decedent's general debts, any unpaid debts allowed by the probate court are deductible for Indiana inheritance tax purposes.
Returns. For estates involving a resident decedent, the Indiana probate court having jurisdiction over the estate also determines the amount of inheritance taxes owed. An Indiana inheritance tax return, together with an itemized schedule of debts owed and all deductions claimed, must be filed with the court within nine months of the decedent's death.
Any resident inheritance tax owed is paid to the county treasurer of the decedent's county of residence. A five percent discount is available for payments made within nine months of the decedent's death.
For nonresident decedents, the Inheritance Tax Division of the Indiana Department of State Revenue has exclusive jurisdiction over these matters. This department receives the tax return and computes and determines the amount of taxes owed upon any taxable transfers. In either case, though, any estate taxes owed must be paid within 12 months of the decedent's death.
Generation-skipping transfer tax. Indiana imposes a generation-skipping transfer tax equal to the federal credit.
|
|
