estate tax

estate tax: see inheritance tax.

Levy on the value of property changing hands at the death of the owner, fixed mainly by reference to its total value. Estate tax is generally applied only to estates whose value exceeds a set amount, and it is applied at graduated rates. An estate tax was first instituted in the U.S. in 1898 to help finance the Spanish-American War; it was repealed in 1902 but permanently reimposed in 1916, initially to help finance mobilization for World War I. Methods of avoiding estate tax (e.g., gifts and trust funds) were largely foiled by the U.S. Tax Reform Act of 1976.

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The state of Ohio imposes an estate tax on the transfer of assets from resident decedents (or on Ohio assets of nonresidents). The tax rates are shown in the table below but because of tax credits, the effective lower limit on taxable estates is currently $383,333. Ohio also allows a "marital deduction" equal to the net value of any asset passing to the surviving spouse.

In 2005, another inheritance-related tax, called the Ohio additional estate tax or "sponge tax", was eliminated.

Though the state enforces the tax (through its administrative officers in the counties) and receives the tax, it retains only 20% of the tax and passes the rest on to the townships or municipalities associated with the resident decedent or the resident decedent's real property. Therefore, though the tax has been considered a progressive tax on inherited Ohio fortunes, most of the revenue benefits have accrued to villages and cities with relatively higher per capita incomes and net worths and therefore the tax is administratively a regressive tax.

An attempt to end the Ohio estate tax was blocked in 2001 when state revenues began to drop and intense lobbying from a league of suburban municipalities lobbied for a continuation of the tax. In 2007, the Ohio estate tax was again proposed for amendment or repeal.

Taxable Estate Bracket	Tax Rate
Not over $40,000	2% of taxable estate
Over $40,000 but not over $100,000	$800 + 3% of excess over $40,000
Over $100,000 but not over $200,000	$2600 + 4% of excess over $100,000
Over $200,000 but not over $300,000	$6600 + 5% of excess over $200,000
Over $300,000 but not over $500,000	$11600 + 6% of excess over $300,000
Over $500,000	$23600 + 7% of excess over $500,000

See also

• Estate tax in the United States

External links

• Ohio Department of Taxation
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