This window shows the information used to calculate the different kinds of state estate taxes that are based on the federal estate tax credit for state death taxes that existed before it was phased out by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
If you are working with a state that you created, you can change the information displayed and customize the calculation of the state estate tax. If you are viewing a state that you did not create, then you won't be able to change any of the inputs.
Effective Date - The starting date for which the state estate tax would apply.
Based on Federal Taxable Estate? Answer yes if this state has decoupled its state estate tax calculation from the Federal calculation of the State Death Tax Credit. In most cases, this means the state imposes a tax based on the federal estate tax credit for state death taxes that existed before it was phased out by EGTRRA.
Include Adjusted Taxable Gifts in Estate? Answer yes if the prior adjusted taxable gifts should be included in the estate when calculating the estate tax.
State-Specific QTIP Election? Can the estate make a qualified terminable interest property ("QTIP") election under I.R.C. Section 2056(b)(7) for the purpose of the state estate tax that is different from the election made for federal estate tax purposes?
State Tax Deductible? Is the state estate tax calculated using the taxable estate determined after deducting the state death tax in accordance with I.R.C. Section 2057? When this question is answered yes, it often results in an interrelated calculation.
Out-of-State Property Excluded? Answer yes if the taxable estate includes real property which is outside of the decedent's domicile and so not subject to tax in the decedent's domicile.
Threshold Amount - Some states have what is called a "cliff tax." This means that a tax is only calculated if the estate is over a certain amount, but the exemption is less than that amount.
Exemption is Federal Exclusion? Answer yes if the state's exemption is equal to the Federal Exclusion.
Other Exemption Amount - If the state's maximum exemption is different from the Federal Exclusion, enter the value here. If the state does not allow an exemption, leave this input $0.
Inflation Adjustment for Exemption - Answer yes if the Other Exemption Amount can be adjusted for inflation.
State Tax Limited by Federal Estate Tax? same as prior
Exclusion is Federal Exclusion? Answer yes if the state's exclusion is equal to the Federal Exclusion.
Other Exclusion Amount - If the state's maximum exclusion is different from the Federal Exclusion, enter the value here. If the state does not allow an exclusion, leave this input $0.
Exclusion Phase-Out Percentage - Enter the a phase-out percentage for the exclusion.
Adjust Exclusion for Inflation? Answer yes if the Other Exclusion Amount can be adjusted for inflation.
Include ATGs in FET Limitation? Answer yes if the prior adjusted taxable gifts should be included in the estate when calculating the state estate tax using overridden brackets.
Include DSUE in FET Limitation? Answer yes if the Deceased Spousal Unused Exclusion is used when calculating the state death tax credit.
FET Limitation Rates Based on - As it existed before EGTRRA, the state death tax credit was limited to the federal estate tax that would otherwise be payable taking into account the federal estate tax unified credit. Enter the year for which the rates should be based on. (this entry will likely need revision).
Maximum Tax Rate - Enter the maximum tax rate applicable. (side note, only MD uses this entry, as of now)
Credit Amount - Enter the maximum allowable state credit
Adjust Credit for Inflation? Answer yes if the Credit Amount can be adjusted for inflation.
Inflation Rounding Direction - Select an option to be used for rounding. This rounding technique will be used for calculating projected values using inflation.
Inflation Rounding Multiple - Enter a value to be used for rounding.
Override State Death Tax Credit Table? If the state uses its own set of brackets for calculating the state estate tax, check this checkbox and enter the brackets used by the state.
Last Updated - Don't forget to record the date when you update the data and who has updated it. This allows you to keep track of the calculation changes as you enter them.