Pennsylvania Inheritance Tax: Who Pays, What’s Taxed, and When It’s Due
If someone close to you has died in Pennsylvania, you will probably meet the inheritance tax before you meet anything else. It is one of the few state inheritance taxes left in the country, most national guidance ignores it, and it does not wait for the estate to be settled. This page explains who pays it, what it applies to, and the dates that matter.
What the Pennsylvania inheritance tax actually is
Pennsylvania taxes the transfer of property from a person who has died to whoever receives it. It is not the same thing as the federal estate tax, and confusing the two costs families money every year.
The federal estate tax only affects very large estates and most families never encounter it. The Pennsylvania inheritance tax has no general exemption based on the size of the estate. A modest estate that would never trouble the federal system can still owe Pennsylvania inheritance tax on the first dollar.
The other difference matters just as much. The federal tax is charged to the estate. The Pennsylvania tax is charged according to who inherits. Two people can receive exactly the same amount from the same estate and pay very different tax, purely because of their relationship to the person who died.
Who pays, and at what rate
The rate depends entirely on the relationship between the person who died and the person receiving.
| Who is inheriting | Rate |
|---|---|
| A surviving spouse | 0% |
| A parent inheriting from a child aged 21 or under | 0% |
| A child aged 21 or under inheriting from a parent | 0% |
| Charities and government entities | 0% |
| Children over 21, grandchildren, parents and other lineal heirs | 4.5% |
| Brothers and sisters | 12% |
| Everyone else — nieces, nephews, cousins, friends, unmarried partners | 15% |
Both directions of the parent and young-child transfer are untaxed. A child aged 21 or under inherits from a natural, adoptive or stepparent at 0%, and a parent inherits from a child who died aged 21 or under at 0%. This applies to deaths after 31 December 2019. Note that a grandchild aged 21 or under inheriting from a grandparent is still 4.5% — the 0% runs parent to child only.
Stepchildren and adopted children count as children. The statutory definition is wider than most people assume, which means the rate is often 4.5% where a family has braced itself for 15%.
An unmarried partner of thirty years is taxed at 15%. Pennsylvania looks at legal relationship, not closeness. This is one of the strongest reasons for couples who have chosen not to marry to plan deliberately rather than rely on a will alone.
What is taxed and what is not
Broadly, the tax reaches almost everything the person owned at death, whether or not it passes through probate. That last part surprises people: avoiding probate does not avoid inheritance tax.
Generally taxable
- Real estate in Pennsylvania
- Bank and investment accounts
- Vehicles, jewelry and personal belongings of real value
- Business interests, including shares in a closely held company
- The deceased’s share of jointly owned property
- A life insurance policy the deceased owned on someone else’s life, at its cash surrender value
Generally not taxable
- Anything passing to a surviving spouse
- Life insurance on the life of the person who died — exempt whether it is paid to a named beneficiary or to the estate
- Certain government and military death benefits
- Property left to a qualifying charity
Retirement accounts are their own question. Whether an IRA or 401(k) is taxable turns on whether the person who died could have withdrawn without the 10% federal early withdrawal penalty — generally whether they had reached 59½, or were disabled at any age. Roth accounts are treated differently again.
When it is due, and the discount most people miss
The return and the payment are due nine months after the date of death.
But there is an earlier date that matters more. Pennsylvania offers a 5% discount on inheritance tax paid within three months of the death. On an estate of any size that is real money, and it is available to anyone who acts early enough.
The practical problem is obvious. Three months after a death is early. Families are still grieving, the paperwork is incomplete, and nobody has told them a deadline is running. By the time most people speak to anyone about tax, the discount has gone.
What has to happen in the first 30 days
If you are the person responsible for an estate in Northampton or Lehigh County, this is the short version of what to get moving on before anything else.
- Locate the original will, if there is one. A copy is not the same thing.
- Get certified copies of the death certificate — more than you think you need.
- Open the estate with the Register of Wills in the county where the person lived.
- Secure the property, and do not distribute anything to anyone yet.
- List every asset with a rough value, including jointly held accounts.
- Diary the three-month date for the tax discount, and the nine-month deadline.
- Do not enter a safe deposit box before checking the rules that apply to it.
Where people get caught out
Putting a child’s name on a bank account. It feels like a tidy way to make things simple later. Pennsylvania may treat part or all of that account as taxable, and if the name was added within a year of death the treatment is harsher still.
Assuming a trust solves it. Some trusts help. Many do not, at least not for this tax. It depends on the type of trust and when it was created.
Waiting for probate to finish. The tax deadlines run from the date of death, not from the date the estate is ready.
Giving assets away shortly before death. Pennsylvania has no gift tax, which makes lifetime giving genuinely useful — but transfers made within one year of death are pulled back in, above a small annual exclusion per recipient.
Common questions
Does a surviving spouse pay Pennsylvania inheritance tax?
No. Transfers to a surviving spouse are taxed at 0%. A return may still be required.
Do I still owe it if the estate avoided probate?
Usually yes. Avoiding probate changes how property passes, not whether Pennsylvania taxes the transfer.
What happens if I miss the nine-month deadline?
Interest begins to run, and the 5% early-payment discount will already have been lost.
Is life insurance taxed?
Proceeds of insurance on the life of the person who died are exempt from Pennsylvania inheritance tax — including where they are paid to the estate rather than to a named beneficiary. The real exception is a different one: a policy the deceased owned on somebody else’s life is taxable at its cash surrender value. Naming a beneficiary is still worth doing, but for probate and liquidity reasons rather than tax.
Where is the return filed?
With the Register of Wills in the county where the person lived — not directly with the state. For most Bethlehem families that is Northampton County in Easton, or Lehigh County in Allentown.
Talk it through with someone who has done the tax as well as the law
Most of what worries people about this tax 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. He was born and raised in Bethlehem, and Leeson & Co. is a short walk from the Northampton County courthouse.
If you are dealing with a recent death, say so when you call and we will tell you what needs doing first, whether or not you go on to instruct us.
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.