Law Articles

Death of the Ohio Death Tax


While there has been great discussion nationally about tax reductions, many Ohio residents don’t realize that a significant change has occurred in our state.  Effective January 1, 2013, the Ohio Legislature repealed the Ohio Estate Tax.  This legislative change occurred with the passage of the 2012-2013 Budget Bill, House Bill 153.  The effect is that there will be no tax whatsoever on estates of individuals who die on or after January 1, 2013.  Furthermore, no consent forms are required for transfers of accounts and assets belonging to individuals who die on or after January 1, 2013.

The Ohio Department of Taxation reports that the estate tax was enacted in 1968 to replace a state inheritance tax.  There has been an inheritance tax in Ohio since 1893 during the McKinley administration. 

The Ohio estate tax has long been criticized as an unfair “death tax” that drove retirees and businesses out of our state.  It was particularly hard on the farming community.  Often, farm land would have to sold to pay the estate tax, reducing the farm land for future generations.

The Ohio estate tax brought in nearly $334 million in 2009.  Of that amount, 20 percent went into state coffers. The remaining 80 percent was directed to local governments. Many Ohio local officials have expressed anger with the change, saying that the loss of revenue will force them to cut services to their constituents.

It is important to note that the Ohio estate tax must still be paid by those individuals who died prior to January 1, 2013.  The estate tax has two rates: 6 percent for estates between $338,333 and $500,000, and 7 percent for estates worth more than $500,000. Those estates with a gross taxable value of $338,333 or less are still effectively exempt from payment of the tax.  For those dying prior to January 1, 2013, the tax commissioner still requires the filing of consent forms for accounts with a value of greater than $25,000.  These consent forms are not required when assets are passing to a surviving spouse alone, regardless of the dollar amount.

While the Ohio estate tax has been repealed, the federal estate tax is still very much alive.  In 2014, estate assets in excess of $5,340,000 will be taxed at the rate of forty percent (40%).

Taxation is only one thing to consider in developing a sensible estate plan.  It is important to review your individual situation with a trusted probate attorney.

This article is intended to provide general information about the law. It is not intended to give legal advice.  Readers are urged to seek advice from an attorney regarding their specific issues and rights.

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