Pennsylvania charges an inheritance tax on money and property you receive from a will or estate
Pennsylvania has an inheritance tax — a state tax on what you inherit, separate from any federal estate tax. Unlike most states, Pennsylvania taxes the person who receives the inheritance, not the estate itself. The tax rate depends on your relationship to the person who died and what you inherit. Spouses, parents, and children pay nothing. Siblings pay 12 percent. Everyone else pays 15 percent.
The tax applies to real estate, bank accounts, investments, vehicles, and personal property located in Pennsylvania or owned by someone who lived there when they died. The executor of the estate — the person handling the will — is responsible for filing the inheritance tax return and paying what is owed, usually within nine months of the death.
Key Takeaways
- Spouses, parents, and children inherit tax-free in Pennsylvania; siblings pay 12 percent and all other relatives or unrelated people pay 15 percent.
- The tax applies to all property in Pennsylvania plus property anywhere if the deceased person lived in Pennsylvania when they died.
- The executor files the inheritance tax return with the Pennsylvania Department of Revenue within nine months of death, though extensions are possible.
- Some property does not count toward the tax, including life insurance proceeds, retirement accounts with named beneficiaries, and property held in joint ownership with right of survivorship.
Who pays nothing: spouses, parents, and lineal descendants
Pennsylvania exempts certain family members entirely from inheritance tax. A surviving spouse pays zero tax on any inheritance. Parents of the deceased pay zero tax. Children and grandchildren of the deceased pay zero tax, as do more distant lineal descendants like great-grandchildren.
The term "lineal descendant" means people in a direct line down from the deceased — children, grandchildren, great-grandchildren, and so on. It does not include siblings, aunts, uncles, cousins, or in-laws, even if you were very close to the person who died.
Siblings and other relatives: the 12 and 15 percent rates
Siblings of the deceased pay a flat 12 percent inheritance tax on what they inherit. This applies whether you are a full sibling or a half-sibling. The tax is calculated on the value of the property you receive, not on the total estate.
Everyone else — aunts, uncles, cousins, nieces, nephews, friends, and unrelated people — pays 15 percent. The rate is the same whether you inherit a small amount or a large one. There is no threshold below which the tax does not explore, though the executor may not file a return if the total inheritance is very small (the threshold changes yearly, so the executor will know the current amount).
Property that does not count toward the tax
Not everything you receive after someone dies is subject to Pennsylvania inheritance tax. Life insurance proceeds paid directly to a named beneficiary are exempt. Retirement accounts — IRAs, 401(k)s, and similar accounts — are exempt if they have a named beneficiary who is not the estate itself. Payable-on-death bank accounts and transfer-on-death investment accounts are also exempt.
Property held in joint ownership with right of survivorship passes directly to the surviving owner and is not taxed. Property in a living trust is not taxed as an inheritance because it does not go through the estate. Some property may also be exempt if it qualifies as a homestead or if the deceased person's estate is very small — the executor will determine this when filing.
How the executor files and pays the tax
The executor must file Form PA-41, the Pennsylvania Inheritance Tax Return, with the Department of Revenue. The return is due nine months after the date of death. The executor needs to list all property that is subject to tax, calculate the tax owed based on each heir's relationship to the deceased, and pay the total amount due.
The executor can request a six-month extension if needed, but the tax itself is still due nine months after death — the extension only delays filing the paperwork. If the executor does not file on time, penalties and interest begin to accumulate. The Department of Revenue can also place a lien on the estate's property to find payment.
Some executors hire an accountant or attorney to handle the inheritance tax return, especially if the estate is large or complex. The cost of professional help comes out of the estate before heirs receive their inheritance.
The difference between inheritance tax and estate tax
Pennsylvania has an inheritance tax but no state estate tax. The federal government has an estate tax, but it only applies to very large estates — in 2024, the threshold is over $13 million, and it changes yearly. Most people do not owe federal estate tax.
The inheritance tax is what Pennsylvania charges. It is based on the heir's relationship to the deceased and the value of what they inherit. The estate tax (federal only, in most cases) is based on the total value of everything the deceased person owned. The two are separate taxes, and both may explore to the same inheritance if the estate is large enough.
What happens if you do not pay
If the executor does not pay the inheritance tax by the important date, the Department of Revenue will send a notice. Penalties are 5 percent per month, up to 25 percent of the tax owed. Interest also accrues at a rate set by the state, compounded daily.
If the tax remains unpaid, the Department can place a lien on any property in the estate. This prevents the property from being sold or transferred until the tax is paid. In some cases, the Department can also pursue the heirs directly if the executor fails to pay, though the heirs' personal liability depends on how much they received and whether they received notice of the tax debt.
Frequently Asked Questions
Do I have to pay inheritance tax if I live outside Pennsylvania?
No. Pennsylvania only taxes people who inherit property located in Pennsylvania or who inherit from someone who lived in Pennsylvania when they died. If you live in another state and inherit from someone who lived in another state, you owe no Pennsylvania inheritance tax. You may owe tax in your own state, depending on where you live.
What if the person who died had property in multiple states?
Pennsylvania taxes only the property located in Pennsylvania. Property in other states is taxed by those states under their own rules. The executor will need to file separate tax returns in each state where the deceased owned property.
Can I appeal the inheritance tax amount if I think it is wrong?
Yes. If you believe the property was valued incorrectly or the tax was calculated wrong, you can file a protest with the Department of Revenue within a set time frame. You will need documentation of the property's actual value. An accountant or tax attorney can help with this process.
Does a prenuptial agreement affect inheritance tax?
A prenuptial agreement can affect what a spouse inherits, but it does not change the tax rate. Spouses still pay zero inheritance tax on what they receive, regardless of a prenup. The prenup only determines how much the spouse is may have access to to receive.
What if someone dies without a will?
Pennsylvania law determines who inherits, and the inheritance tax still applies based on each heir's relationship to the deceased. The court appoints an administrator to handle the estate in place of an executor. The administrator must still file the inheritance tax return and pay what is owed.