Some states clearly think that estate taxes are nothing but unnecessary taxes. For example, Florida does not have an estate tax, which is why so many people go there -- along with the sunshine and warm weather, of course -- as they grow older.
However, a recent trend has been for states to either lower the taxes or increase the exemption levels. One of the reasons why they are doing this is because they do not want so many people to leave. The governments hope that changing tax laws will get some people to stay within those individual states.
For example, Tennessee has been using an exemption level of $2 million, but it is going to go up by more than twice that much, rising this year to $5 million. Maryland has the level set at $1 million right now, but it is going to rise to $1.5 million. New York has a more specific figure of $2.062 million currently, but that is set to go up to $3.125 million.
It does not seem that all states are following this popular trend, though. In New Jersey, the exemption level is a mere $675,000. That's nothing compared to the coming $5 million in Tennessee or the $3.125 million in New York. Even if an estate is small in New Jersey, high taxes could be leveled.
As more and more states jump on this bandwagon, it will be interesting to see if lawmakers in New Jersey decide to follow the trend and raise the exemption levels. If you are doing estate tax planning, make sure that you always know what the exemptions are and if they are changing.
Source: Times Herald Record, "Protecting your future: Trend among states to lower estate taxes" Bonnie Kraham, Nov. 19, 2014