The Pennsylvania inheritance tax applies to nearly every transfer of property at death, and the rate depends on who inherits: 0% for a surviving spouse, 4.5% for children and other lineal descendants, 12% for siblings, and 15% for everyone else. There is no minimum estate size. A $10,000 bank account passing to a niece is taxed the same way, proportionally, as a $10 million estate passing to one.
Rates by Relationship
Pennsylvania sets its rates in 72 P.S. § 9116, and the tax is paid on what each heir receives rather than on the estate as a whole:
- 0% for transfers to a surviving spouse, transfers from a child aged 21 or younger to a parent, and transfers from a parent to a child aged 21 or younger.
- 4.5% for transfers to lineal descendants (children, grandchildren, and further generations), parents, grandparents, and the spouse or surviving spouse of a deceased child.
- 12% for transfers to siblings.
- 15% for everyone else, including nieces, nephews, cousins, friends, and non-exempt entities.
Charitable organizations and government entities pay nothing.1Pennsylvania Department of Revenue. Inheritance Tax The 0% rate for children under 21 runs both directions: a young child’s estate passing to a parent is tax-free, and a parent’s estate passing to a child under 21 is also tax-free.2Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 9116 – Rates Once the child turns 21, the ordinary 4.5% lineal descendant rate applies.
What Property Gets Taxed
The tax reaches all real property and tangible personal property physically located in Pennsylvania at the time of death. It also reaches intangible property such as bank accounts, stocks, and bonds owned by a Pennsylvania resident, no matter where the bank or brokerage is based. If the decedent lived out of state, Pennsylvania taxes only the real estate and tangible property physically sitting in Pennsylvania.
What’s Exempt
Under 72 P.S. § 9111, several categories are fully outside the tax:
- Life insurance proceeds. All proceeds from a policy on the decedent’s life are exempt, including refunds of unearned premiums.3Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 9111 – Transfers Not Subject to Tax
- Some retirement accounts. Traditional IRAs and similar plans are exempt if the decedent died before age 59½, because those funds were still subject to the federal early-withdrawal penalty. If the decedent was over 59½, the traditional IRA balance is taxable. Roth IRAs are always subject to Pennsylvania inheritance tax regardless of age.4Pennsylvania Department of Revenue. Inheritance Tax – Roth IRA
- Property owned jointly between spouses. Completely exempt.
- Qualifying farmland. For deaths after June 30, 2012, certain agricultural land and farm property transferred to eligible recipients is exempt.
Pennsylvania also allows a $3,500 family exemption for a surviving spouse, child, or parent who lived in the same household as the decedent. It comes off the top before the tax is calculated, but it cannot be claimed against jointly held or non-probate property.
The Roth IRA rule is the exemption most families misread. Roths are tax-free for federal income tax purposes, so people assume that treatment carries over. It doesn’t. If a parent leaves a sizable Roth IRA to adult children, 4.5% of the entire balance goes to Pennsylvania.
Joint Accounts and Gifts Before Death
Joint ownership with anyone other than a spouse creates a taxable event at death. The decedent’s share is calculated by dividing the total value by the number of joint owners, regardless of who actually put the money in. A parent who added an adult child to a checking account for convenience has still created a taxable transfer.
Timing matters. If the joint tenancy was created more than one year before death, only the decedent’s fractional share is taxed. If it was created within the last year of life, the full value can be pulled back into the taxable estate. The same one-year lookback applies to any gift or transfer made for less than fair market value: give away $200,000 eight months before dying, and the full $200,000 comes back into the estate at the applicable rate.3Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 9111 – Transfers Not Subject to Tax Gifts made more than a year before death are generally not subject to the tax. Deathbed gifting doesn’t work here.
Filing the Return
The inheritance tax return is Form REV-1500, filed in duplicate with the Register of Wills in the county where the decedent lived.5Pennsylvania Department of Revenue. REV-1500 – Inheritance Tax Return It requires a complete inventory of the decedent’s assets, sorted onto specific schedules:
- Schedule A: real estate
- Schedule B: stocks and bonds
- Schedule C: closely held businesses
- Schedule E: cash and bank deposits
- Schedule F: jointly owned property
- Schedule G: inter-vivos transfers
- Schedule H: funeral expenses and administrative costs (deductions)
- Schedule I: debts such as mortgages and credit card balances
Every asset is valued at fair market value as of the date of death, not the filing date and not the original purchase price. Real estate usually needs a professional appraisal, or at minimum the county assessment as a starting point. Bank and investment accounts need statements showing the balance on the day of death. Deductions require supporting receipts or invoices.
Deadline, Early-Payment Discount, and Penalties
The return and payment are due within nine months of the date of death.6Pennsylvania Department of Revenue. Inheritance Tax General Information – REV-720 A six-month filing extension is available using Form REV-1846 if you request it before the deadline, but the extension only pushes filing, not payment. Interest starts accruing nine months and one day after death.
Pennsylvania rewards early payment. Pay any inheritance tax within three calendar months of the decedent’s death and you get a 5% discount on the amount paid in that window.7Pennsylvania Department of Revenue. How Do I Qualify for the 5 Percent Discount for Inheritance Tax? On a $200,000 estate going to children at 4.5%, the tax is $9,000 and the discount is $450. Partial early payments still earn a partial discount. Checks go to the County Register of Wills.
Miss the nine-month deadline and you owe interest plus a penalty of 25% of the tax owed or $1,000, whichever is less.6Pennsylvania Department of Revenue. Inheritance Tax General Information – REV-720 The $1,000 cap looks light on larger estates, but the compounding interest on unpaid balances is where late filings get expensive.
After You File
The Department of Revenue reviews the return and issues its own notice of valuations, allowable deductions, and tax due.6Pennsylvania Department of Revenue. Inheritance Tax General Information – REV-720 If the Department agrees with your numbers, the estate can get tax clearance and finalize distributions. If the Department disallows deductions or raises valuations, you’ll receive a notice of additional tax due. You can appeal, but that adds months.
Wait for the Department’s notice before distributing assets. If you pay heirs first and the Department later assesses additional tax, the executor can be personally on the hook for the shortfall.
Federal Estate Tax Is a Separate Question
Pennsylvania’s inheritance tax and the federal estate tax are two different taxes. The federal tax under 26 U.S.C. § 2001 applies to the estate as a whole before distribution, and for 2026 it only reaches estates above a $15 million per-person exclusion, made permanent by legislation signed on July 4, 2025.8Internal Revenue Service. What’s New – Estate and Gift Tax9Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax Married couples can effectively shelter up to $30 million. The overwhelming majority of Pennsylvania estates fall well below that line and owe nothing federally. If yours is close to or above the exclusion, the federal return (Form 706) is a separate filing on its own nine-month deadline and warrants dedicated planning with a tax professional.