Over the past decade, two-thirds of states – including California – have phased out their state death tax. New York remains one of a shrinking number of states that still taxes estates. New York Governor Andrew Cuomo's 2014-2015 budget takes a step in the right direction towards tax relief for small businesses and individuals who are currently forced to grapple with one of the most burdensome state death taxes in the country.
His plan increases the New York estate tax exemption from $1 million to match the federal exemption at $5.34 million and lowers the top tax rate from 16 percent to 10 percent. This would reduce the number of estate tax filings by as much as 90 percent – a huge step towards full repeal. As a matter of tax filings, the federal government taxed 3,737 estates in 2012. Because New York failed to follow the national norm of phasing out the death tax, in 2012 the state taxed nearly 4,000 estates.
Forbes recently listed New York as a place “Not to Die” in 2014 because of its high death tax. The $1 million exemption can easily hit a middle-income family with a modest home and retirement savings with a 16% tax. As such, Governor Cuomo's proposal comes at a critical time as states like Ohio, Indiana, North Carolina, and Tennessee have all eliminated their state death taxes.
Americans for Tax Reform supports the measure and encourages New York legislators to work to fully phase out the state death tax. Click here to read the coalition letter sent to Governor Cuomo in support of this important first step.