Tennessee Estate Taxes
Tennessee imposes an inheritance tax and an estate tax that is intended to absorb the difference between the inheritance tax and the maximum credit against the federal estate tax. Because the federal credit for state death taxes has been repealed for the period from 2005 through 2010, there is currently no estate tax imposed in Tennessee. The inheritance tax rates on transfers are as follows:
| Tennessee Inheritance Tax Rates |
| Value of Transferred Property After Exemption |
Tax on Col. 1 |
Rate on Excess |
| (1) |
(2) |
(3) |
(4) |
| $0 |
$40,000 |
$0 |
5.5% |
| $40,000 |
$240,000 |
$2,200 |
6.5% |
| $240,000 |
$440,000 |
$15,200 |
7.5% |
| $440,000 |
and above |
$30,200 |
9.5% |
Transfers to spouses are fully exempt from tax. So are transfers to a U.S. government entity (federal, state, or local) or organizations formed for charitable, educational, or religious purposes. In addition, a single exemption amount of up to $1 million is deducted from the estate of a decedent dying in 2006 or thereafter).
Deductions. The following items can be deducted from a decedent's estate when calculating Tennessee estate tax liability:
- decedent's debts which constitute lawful claims at death (to the extent they are not secured by property outside the state)
- actual funeral expenses
- reasonable administration expenses, including executor's and attorney's fees actually allowed and paid (not in excess of lawful rates)
- the federal marital deduction
- property taxes which are a lien at the date of death
- federal income taxes accrued at the date of death
- death duties paid or payable to other states on intangible personal property
- special assessments which, at the time of death, were a lien on real property within the state
- year's support allowance for surviving spouse or minor unmarried children
- appraisal fees
- mortgages
Returns. The personal representative or other person in possession of a decedent's property must file a copy of the will (if any), an inventory of decedent's assets, and a Tennessee estate tax return with the Commissioner of Revenue within nine months of the decedent's death. The filing obligation is not required, however, if the gross estate is less than the maximum single exemption amount (e.g., $700,000 in 2003).
Any Tennessee estate taxes owed must be paid to the Commissioner of Revenue within nine months of the decedent's death or at the end of any additional time granted for filing the inventory and return. The Commissioner, however, may allow the taxes owed to be paid in installments.
Generation-skipping transfer tax. Tennessee imposes a generation-skipping transfer tax that is equal to the federal credit.
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