Indiana May Eliminate or Reduce State Inheritance Tax

Under current Indiana law, a surviving spouse receives an unlimited inheritance from a deceased spouse tax free. Parents, children, and grandchildren pay a 1-10% tax on inheritances over $100,000, while siblings and distant relatives receive up t0 $500 tax free, paying higher rates on the balance.

Last week, the Indiana House approved House Bill 1199 which would slowly phase out the state’s inheritance tax by creating a steadily increasing credit against taxes owed beginning in 2014. The Bill would eliminate inheritance tax completely by 2024. The House approved the Bill 78-17, and it will now go to the Senate.

The Indiana Senate approved Senate Bill 293 which increases exemption amounts for inheritors and reduces the inheritance tax rate by half starting in July 2016. The Senate approved the Bill 50-0 and it will now go to the House.

See Dan Carden, Legislature Poised to Reduce or Eliminate State’s Inheritance Tax, NWI.com, Feb. 6, 2012.