What Assets Are Subject to Pennsylvania Inheritance Tax — Including “I Put My Son’s Name on My Bank Account”
Pennsylvania reaches further than most people expect. Avoiding probate does not avoid this tax, and several of the arrangements families set up specifically to keep things simple are taxed anyway.
Joint accounts
This is the one we are asked about most, so this page is where we deal with it properly.
Where a parent adds a child’s name to an account for convenience, the survivor is generally taxed on one half of the balance. Where the joint interest was created within one year of death, the treatment is harsher: the full value is taxable, less a small exclusion. Joint property held with a spouse is exempt.
The account that was meant to make things easy becomes a taxable transfer nobody planned for.
Retirement accounts
Stated backwards almost everywhere, so carefully:
An IRA is taxable if the person who died could have withdrawn from it without the 10% federal early withdrawal penalty — generally if they had reached 59½, or were disabled at any age. It is generally exempt if they were under 59½ and not disabled.
An employer plan is a separate question. For a 401(k), pension or profit-sharing plan, what matters is whether the person who died actually had the right to take the money in their lifetime, which depends on the plan’s own terms and on whether they had left that employer. A 401(k) can therefore be exempt where an IRA held by the same person is not.
A Roth is split. The contributions are taxable whatever the age at death, because they could always have been withdrawn without penalty. Where the person died before 59½ and was not disabled, the earnings are not taxable, because withdrawing them would have carried the penalty. Only the contribution portion goes on the return.
Generally taxable
- Pennsylvania real estate
- Bank and investment accounts
- Vehicles and valuable personal property
- Business interests, including closely held shares
- Transfers made within a year of death
- A life insurance policy the deceased owned on someone else’s life — taxable at cash surrender value
Generally not taxable
- Anything passing to a surviving spouse
- Life insurance on the deceased’s own life — exempt whether it is paid to a named beneficiary or to the estate
- Qualifying charitable gifts
- Certain government and military death benefits
Why titling decides so much
Two families with identical wealth can pay very different tax purely because of how things are titled. That is worth an hour of someone’s attention while there is still time to change it.
See also the rates by relationship and our main guide to the Pennsylvania inheritance tax.
Talk it through
Most of what worries people here comes down to two questions: how much, and by when. Both are usually answerable quickly once someone has seen the actual assets.
Joseph F. Leeson III trained and practiced as a CPA before he practiced law — four years in tax accounting at an international public accounting firm and a large financial corporation. He holds a JD from Indiana University Maurer School of Law and an MBA in accounting from DeSales University, and was named to MSN’s Legal Powerlist: 2026’s Most Respected Lawyers.
This page explains general principles of Pennsylvania law and is not legal advice for your situation. Rates, thresholds and deadlines change. Please speak to us before acting on anything here.