Ohio Repeals Estate Tax

Ohio State Tax RepealOn June 30, 2011, Ohio Governor John Kasick signed a new law repealing the Ohio estate taxes. This law will be effective January 1, 2013.

Ohioans dying before that date will remain subject to Ohio estate taxes.

In Ohio, taxes are calculated by first adding the assets owned at death to any assets transferred in contemplation of death (within 3 years prior to death). Next, the assets left to the spouse and to charity are deducted. The deceased’s final expenses are then deducted. Then, the following table is applied:

Net Taxable Estate Tax Rate
Over $338,333 but not over $500,000 $13,900 + 6% of excess over $338,333
Over $500,000 $23,600 + 7% of excess over $500,000

For deaths after 01/01/02 and before 1/1/2013, a $13,900 credit is subtracted. The effect of this credit is that the first $338,333 of taxable assets pass free of Ohio estate taxes. Assets above that amount are taxed at roughly 7%.

Ohio estate taxes provide significant funding to local governments and school districts. Because estate tax revenues are very difficult to project, many communities choose not to “anticipate” the receipt of this income when preparing their budgets. Nonetheless, estate tax revenues are crucial to balancing the budget of many of these local governments. That may cost some small number of jobs at the local level.

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