The estate tax exemption is scheduled to change—again—at the end of 2012. Attorneys and financial planners are advising clients to take stock.
While uncertainty permeates the federal estate tax, the future of the Ohio estate tax is much clearer: After 2012, it doesn’t have one.
In June, Gov. John Kasich signed House Bill 155, which repeals the Ohio estate tax as of Jan. 1, 2013. Until then, anyone who inherits an estate valued at $338,333 or more will pay a flat $13,900 plus a 6 percent rate on the excess; estates worth $500,000 or more pay $23,600, plus a 7 percent tax rate, according to the Ohio Department of Taxation.
“You don’t have to have a lot of wealth to get hit by the Ohio estate tax,” says John Schuman, a principal at financial planning firm Budros, Ruhlin & Roe.
Ohio’s estate tax collections have fallen over the years as older residents moved to states with smaller or no estate taxes, Schuman says. Once the tax is off the books entirely, the biggest impact will be felt by municipalities that benefited from estate taxes due to a large number of older residents. In Bexley, for example, 15 percent of the city’s annual revenue comes from the Ohio estate tax.
Cities will have to find revenue to replace the tax next year. But until Jan. 1, the tax remains in effect. “There’s an incentive to stay alive, just like there was in 2009,” Schuman says.
Bill Melville is a freelance writer.
Reprinted from the May 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.