Ohio Estate Tax

The state of Ohio's Estate Tax has four parts: the basic tax, the additional estate tax, the generation-skipping tax, and the tax on nonresidents. Changes to the federal estate tax laws have affected the Ohio estate tax laws. The additional estate tax is equal to the maximum credit allowable by federal estate tax law for the paying of state estate taxes. In effect, this allows Ohio to collect more taxes without increasing the total state and federal taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 phases out the credit for paying state estate taxes. For estates of decedents dying after December 31, 2004, these credits no longer exist. However, unless congress changes the laws again they will reappear in 2011. The budget bill will effectively repeal the additional estate tax for decedents dying after the day the governor signs the bill. In addition, the bill grants a credit for the amount of the additional estate tax for estates for those who died after December 31, 2001 but before the governor signed the bill. Executors of larger estates of individuals who died after 2001 may consider amending their Ohio Estate Tax Returns.

The generation-skipping tax is also affected by the Economic Growth and Tax Relief Reconciliation Act of 2001. This is a tax on the transfer of property to a person who is two or more generations below the decedent, such as a grandparent to a grandchild. The federal credit is elimated for estates of decedents who die after 2004. The budget bill will effectively repeal this tax for taxpayers who die on or after the governor signs this bill. There is not a credit for taxpayers who die before the governor signs this bill.

Ohio allows a deduction for the value of a family-owned business or farm to the extent it is passed on to other family members and the deduction is claimed on the federal return. The Economic Growth and Tax Relief Reconciliation Act of 2001 suspends the deduction for taxpayers dying after 2003. For Ohio purposes, the suspension is effective on or after the governor signs the bill. This deduction will reappear in 2011 unless congress acts to change it.

The governor signed this legislation on June 30, 2005.