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New York Estate Tax: a Quick Look

One of the most pressing concerns among people who have substantial amount of assets is the protection of those assets from the grip of the taxman. Whenever someone comes to possess significant sums of wealth, a big part of his or her agenda, moving forward, will be shielding those sums from the many hands that want to reach out to grab them. Toward this end, it’s important that high net worth individuals be as educated as possible on the various taxes that can eat at their wealth. The New York estate tax is something that every high net worth person should be aware of, as it can impose heavy liabilities in certain circumstances.  

The estate tax in the State of New York is assessed and implemented separately from the federal estate tax; however, though this is the case, the New York estate tax is in some ways influenced by the structure of the federal estate tax. For instance, in 2019, the exemption for the New York estate tax will mirror whatever the exemption will be for the federal estate tax. In this article, we will discuss the mechanics of the New York State estate tax and consider its impact and most probably trajectory in the future. 

Exemption & Rate Structure 

Currently, the exemption for the New York State estate tax stands at $5,250,000. I.e., for deaths which occur between April 1, 2017 and December 31, 2018. This means that an estate less than this amount will incur no New York estate tax. As mentioned, the New York State estate tax exemption will match the federal estate tax exemption starting in 2019. The projection for the federal estate tax exemption is $11.2 million.  

New Yorkers with estates over the exemption must use the tax tables. They’re provided by the Department of Taxation and Finance to calculate their tax liability. The top rate for the estate tax currently stands at 16% (and this applies to taxable estates above $10.1 million).  

Interestingly, New York taxpayers may face a tax liability “cliff” involving estates which go above 5% of the exemption. This means that if a New York estate is worth 5% more than the exemption, the entire estate becomes taxable. That is, not just the sum above the exemption amount. That happens for estates currently valued at $5,512,500. In other words, estates that exceed this 5% threshold effectively lose the entire exemption. The entire estate is taxable. This is one reason why you need to be as accurate as possible when assessing the value of an estate.  

The Future of the New York Estate Tax

It seems very likely that the New York estate tax is here to stay, at least for a long time. The exemption amount is already quite high. Very soon it will be brought into line with the federal amount. Accordingly, no reasonable argument can be made that the tax is overly oppressive for New York taxpayers. In 2017, the State of New York generated well over $1 billion in tax revenue from the estate tax. In 2016 this amount was substantially higher (approximately $1.5 billion). Given our current state budgetary needs, there’s no reason to expect that this New York tax will disappear anytime soon.

Call Us For Assistance!

Complying with New York taxes can be a complicated task. That’s why it’s a good idea to consult with a qualified New York tax attorney to help throughout the process. The attorneys at Mackay, Caswell & Callahan, P.C. have considerable experience with the New York estate tax and other local taxes.  With offices in Albany, New York City, Rochester, Syracuse, Utica and Watertown, we’ve got an office near you. We’re also happy to assist you with any estate tax issues you have. Don’t hesitate to contact us online or call us today if you need assistance! 

Image credit: Anthony Quintano