Planning an estate is a full and detailed experience that isn’t always intuitive and can be confusing. Nuances and unexpected taxes related to an inheritance can impact the estate itself or the beneficiary. One of the most common questions we hear is this: Is there a federal inheritance tax? The simple answer is no—the federal government does not impose an inheritance tax.
However, there are other tax implications to consider, especially if you live in Pennsylvania, where the state inheritance tax is among a group of other factors you must plan for. In this guide, we will detail what you need to know about inheritance and estate taxes, how they may impact your beneficiaries, and how Auld Brothers Law Group can help you create a strategic estate plan.
Understanding Federal Inheritance and Estate Taxes
While there is no federal inheritance tax, the federal government does impose an estate tax on high-value estates. As of 2024, the federal estate tax exemption was $13.61 million per individual. In 2025, it increased to $13.99 million. This means only estates exceeding this threshold will be subject to federal estate taxes, with tax rates ranging from 18% to 40%.
If your estate is below this threshold, your beneficiaries will not owe federal taxes when they inherit your assets. However, other tax considerations, like capital gains and state-level inheritance taxes, may still apply.
Pennsylvania Inheritance Tax: What You Should Know
Unlike federal law, Pennsylvania is one of just six states that imposes an inheritance tax on assets passed down to beneficiaries. The Pennsylvania Inheritance tax rates depend on the relationship between the deceased and the recipient:
- 0% for transfers to surviving spouses and charitable organizations
- 4.5% for direct descendants (children, grandchildren)
- 12% for siblings
- 15% for other heirs, such as nieces, nephews, and friends
This tax applies to almost all property, including real estate, bank accounts, and tangible personal property in Pennsylvania. It does not apply to life insurance proceeds paid to a beneficiary, or IRA accounts if the deceased was younger than 59.5 years of age. Understanding Pennsylvania inheritance tax details can help you and your loved ones plan carefully for anticipated future financial responsibilities.
How to Minimize Your Estate Tax Liability
Thankfully, there are legal strategies to minimize the impact of inheritance and estate taxes. Our specialists at Auld Brothers Law help clients pre-plan effective techniques including:
Establishing Trusts
Trusts can help reduce taxable estate value and provide specific instructions on asset distribution. Some common trust options include:
- Revocable living trusts allow you to maintain control of your assets during your lifetime and transfer them smoothly when you pass.
- Irrevocable trusts remove assets from your taxable estate, potentially lowering tax liability.
Gifting Strategies
You can gift assets to your loved ones during your lifetime to reduce the overall size of your taxable estate. In 2025, individuals can gift up to $19,000 annually per recipient without incurring gift tax.
Charitable Contributions
Donations to qualified charities can provide tax deductions and reduce the taxable estate value while ensuring your assets support causes meaningful to you.
Why Estate Planning Is Essential
Proper estate planning protects your loved ones and ensures they are cared for, minimizing unnecessary tax burdens on them after you pass. Though there is no federal inheritance tax, without an estate plan, your assets may be subject to mismanagement or Pennsylvania intestacy laws, which may not align with your wishes. Estate planning allows you to:
- Designate specific beneficiaries
- Reduce potential disputes among your heirs
- Protect assets from creditors
- Ensure smooth asset distribution
Taking proactive steps with estate planning now can save your family significant time and money down the road.
How Auld Brothers Law Can Help
Our legal experts at Auld Brothers Law understand the nuances and intricacies of federal and Pennsylvania estate and inheritance taxes. Our compassionate and experienced team offers personalized guidance to help you:
- Navigate complex tax laws
- Create a customized estate plan that reflects your goals
- Ensure compliance with Pennsylvania inheritance tax requirements
- Protect your legacy for your beneficiaries and future generations
Based in Allegheny County, we are a family firm led by Rebecca A. Auld, a third-generation lawyer in estate and legacy planning. Her current paralegal team boasts a combined legacy of over 100 years of experience. We provide expert legal advice that simplifies planning your estate to offer you peace of mind.
Start Planning Your Estate Today
The details of estate planning do not have to be confusing or overwhelming. Our dedicated attorneys at Auld Brothers Law will help you every step of the way with answers to your questions, the least of which is whether there is a federal inheritance tax. We provide the support, strategy, and guidance you need, no matter what stage of planning you are in.
Let’s start the conversation today. We want to ensure your estate is handled with care and precision and an understanding of the unique tax regulations in Pennsylvania. Contact Auld Brothers Law for a free consultation to discuss your estate planning needs and take the first step toward securing your family’s future.