PA inheritance tax rates depend on who inherits, not the estate’s value. A surviving spouse pays 0 percent; children and other lineal heirs pay 4.5 percent; siblings pay 12 percent; and everyone else pays 15 percent. The tax is due nine months after death, and paying within three months earns a 5 percent discount.
This guide from Sager & Sager Associates walks Berks County executors and heirs through the four rate classes, which assets are taxable (including joint accounts and retirement plans), how the early payment discount works, and how the REV-1500 return is filed with the Register of Wills in Reading. If you are settling a loved one’s affairs, our Berks County probate and estate administration lawyer page explains how we support executors every step of the way.
Key Takeaways
- Pennsylvania charges inheritance tax at four flat rates based on the heir’s relationship to the person who died: 0 percent, 4.5 percent, 12 percent, and 15 percent.
- The rates come from Section 2116 of the Tax Reform Code (72 P.S. 9116), and the Pennsylvania Department of Revenue administers the tax.
- The inheritance tax return (Form REV-1500) and the payment are due nine months after the date of death.
- Paying all or part of the tax within three months of death earns a 5 percent discount on the amount paid early under 72 P.S. 9142.
- Jointly owned property with anyone other than a spouse is generally taxable, and IRAs are taxable when the decedent was 59 and a half or older.
- In Berks County, the return is filed with the Register of Wills at 633 Court Street in Reading, which collects the tax as an agent for the Commonwealth.
Does Pennsylvania have an inheritance tax?
Yes. Pennsylvania is one of a handful of states that still taxes inheritances, and it applies to most property a Pennsylvania resident owns at death, plus Pennsylvania real estate owned by nonresidents. No exemption amount shields a small estate the way the federal estate tax does. Even a modest bank account left to a niece or nephew is taxable.
The tax is charged on the value each beneficiary receives, after allowable deductions such as funeral costs, debts, and administration expenses. The Pennsylvania Department of Revenue inheritance tax page confirms that the tax is due at death and becomes delinquent nine months later.
What are the PA inheritance tax rates for 2026?
The PA inheritance tax rates have not changed in 2025 or 2026. They are set by 72 P.S. 9116 and depend entirely on the relationship between the person who died (the decedent) and the person who inherits.
The four rate classes
- 0 percent: Transfers to a surviving spouse. Transfers from a child age 21 or younger to that child’s parent or stepparent are also taxed at 0 percent. Gifts to charities and exempt institutions are not taxed.
- 4.5 percent: Transfers to lineal heirs. This covers children, grandchildren, stepchildren, adopted children, parents, and grandparents. The Berks County Register of Wills also lists sons-in-law and daughters-in-law in this class.
- 12 percent: Transfers to the decedent’s brothers and sisters, including half-siblings.
- 15 percent: Transfers to anyone else, such as nieces, nephews, cousins, friends, unmarried partners,s and in-laws other than a child’s spouse.
Why the relationship matters more than the amount
Because the rates are flat, a $50,000 gift and a $500,000 gift to the same adult child are both taxed at 4.5 percent. Leaving the same $500,000 to a sister costs more than two and a half times as much in tax. That is why the attorneys at Sager & Sager Associates review beneficiary choices carefully during estate planning in Berks County, especially for clients without a spouse or children.
What property is subject to Pennsylvania inheritance tax?
Nearly everything the decedent owned is taxable, whether or not it passes through probate. This includes real estate, bank and brokerage accounts, vehicles, business interests, and personal property. Several categories cause confusion, so they deserve a closer look.
Jointly owned property
Property held jointly between spouses is exempt. Property held jointly with anyone else, such as a child’s name added to a parent’s bank account, is taxable, even when the name was added only for convenience. For joint ownership created more than one year before death, only the decedent’s fractional share is taxed, based on the number of joint owners. The Allegheny County Register of Wills inheritance tax page explains this fractional rule, and the same statewide rule applies in Berks County. Accounts made joint within one year of death are reported differently and may be taxed in full.
IRAs, 401(k)s and pensions
The decedent’s age matters here. According to the REV-1500 instructions, an IRA is fully taxable if the decedent was 59 and a half or older at death, or was disabled at any age. If the decedent was younger than 59 and a half and not disabled, the IRA is generally exempt. Employer pension plans are exempt when the decedent had no right to possess, assign, or anticipate the payments. Annuities are fully taxable. These accounts are reported on Schedule G of the return.
Life insurance
Pennsylvania exempts life insurance proceeds from inheritance tax, whether paid to a named beneficiary or to the estate. This exemption is one reason life insurance is a useful tool in estate plans that must provide for siblings or unrelated beneficiaries.
Gifts made within one year of death
Gifts made within one year of death are pulled back into the taxable estate to the extent they exceed $3,000 per recipient in a calendar year. A parent who gives each child $10,000 and dies eight months later has $7,000 per child added back.
Who pays Pennsylvania inheritance tax?
The executor named in the will, or the administrator appointed when there is no will, must file the return and pay the tax from estate assets before making distributions. Beneficiaries who receive non-probate assets directly, such as a joint account or an IRA, are responsible for the tax on those items, although the executor usually coordinates the whole return.
Our overview of executor duties explains the full scope of the job, from gathering assets to final distribution. Inheritance tax is often the largest expense an executor handles, and an executor who distributes assets before paying the tax can face personal liability.
How is the tax calculated? An illustration
The following example uses round numbers for illustration only. Every estate is different, and the actual tax depends on the assets, deductions, and beneficiaries involved.
Suppose a widowed Reading homeowner dies with a house, savings and a brokerage account worth $450,000, and the estate pays $50,000 in funeral costs, debts and administration expenses. The taxable estate is $400,000.
- Left to two adult children: 4.5 percent of $400,000 is $18,000 in total tax, or $9,000 per child.
- Left to a brother: 12 percent of $400,000 is $48,000.
- Left to a niece or a close friend: 15 percent of $400,000 is $60,000.
- With the early payment discount: If the executor pays the $18,000 owed by the children within three months of death, the 5 percent discount saves $900, bringing the tax to $17,100.
The gap between $18,000 and $60,000 on the same estate shows why beneficiary choices and planning tools such as life insurance deserve attention well before a death occurs.
How does the 5 percent discount work?
Under 72 P.S. 9142, any portion of the tax paid within three months of death earns a 5 percent discount on that portion. The return itself does not have to be finished within three months. Many executors make an estimated prepayment to the Register of Wills, then file the full REV-1500 later and reconcile the balance.
The Berks County Register of Wills inheritance tax page instructs that checks be made payable to “Register of Wills, Agent.” The Department of Revenue refunds overpayments after it reviews the return, so a reasonable estimate carries little risk.
When is the PA inheritance tax return due?
The REV-1500 and the full payment are due nine months after the date of death. After nine months, interest accrues on any unpaid balance, and penalties may apply. An executor can request an extension to file from the Department of Revenue, but an extension does not stop interest from accruing on unpaid tax.
Filing the REV-1500 in Berks County
- Open the estate with the Berks County Register of Wills so the executor or administrator has legal authority. Our probate post on the Berks County Register of Wills covers that first step.
- Gather date-of-death values for every asset, including statements for joint accounts and retirement plans.
- Complete the REV-1500 and its schedules (Schedule F for joint property, Schedule G for retirement accounts and transfers, Schedule H for funeral and administration costs, Schedule J for beneficiaries).
- File the return in duplicate with the Register of Wills, Berks County Services Center, 2nd Floor, 633 Court Street, Reading, PA 19601, by mail, courier, hand delivery, or the lobby drop box.
- Pay the tax to “Register of Wills, Agent.” The Register forwards the return and payment to the Department of Revenue, which reviews it and issues an appraisement notice.
Common Mistakes Our Attorneys See
Sager & Sager Associates helps executors across Berks County, Pottstown, Montgomery, and Chester counties with inheritance tax returns. These are the problems we see most often.
- Missing the three-month window. Executors wait for the full appraisal before paying anything and lose the 5 percent discount. An estimated payment based on known account balances usually captures most of the savings.
- Leaving joint accounts off the return. A child named on a parent’s checking account often assumes the account is “already theirs.” The Department of Revenue views it as a taxable transfer.
- Misreporting retirement accounts. The 59 and a half rule turns on the decedent’s age at death, not the beneficiary’s age, and disability can make an account taxable even for a younger decedent.
- Distributing before the tax is paid. Executors who hand out money early can be personally responsible if the estate later cannot cover the tax.
- Forgetting deductions. Funeral expenses, grave markers, attorney and executor fees, and debts all reduce the taxable estate. Skipping them means overpaying.
Frequently Asked Questions
Does a surviving spouse pay Pennsylvania inheritance tax?
No. Transfers to a surviving spouse are taxed at 0 percent under 72 P.S. 9116. Jointly owned property between spouses is also exempt. The spouse’s estate will owe tax when it later passes to children or other heirs.
Are adult children taxed at 4.5 percent on everything they inherit?
Yes, with limited exceptions. Children, grandchildren, and stepchildren are lineal heirs taxed at 4.5 percent on taxable assets. Life insurance proceeds and IRAs for a decedent younger than 591/2f are exempt,t regardless of who inherits them.
Is there a minimum estate size before PA inheritance tax applies?
No. Pennsylvania has no exemption threshold like the federal estate tax. Tax is calculated on the value each beneficiary receives, reduced by allowable deductions, no matter how small the estate is.
Where do I file the REV-1500 in Berks County?
File the REV-1500 in duplicate with the Berks County Register of Wills on the second floor of the Berks County Services Center, 633 Court Street, Reading, PA 19601. Payment is made by check to “Register of Wills, Agent.” The Register forwards everything to the Pennsylvania Department of Revenue.
What happens if the inheritance tax is paid late?
Interest begins to accrue on any unpaid balance nine months after the date of death, and the Department of Revenue can add penalties. An extension to file does not stop interest. Executors who want to avoid interest can make an estimated payment before the deadline.
Can inheritance tax be reduced through estate planning?
Often, yes. Carefully choosing beneficiaries, using life insurance, making lifetime gifts more than one year before death, and structuring retirement accounts can all lower the total tax. Results depend on the specific family and assets, so an attorney should review your plan.
Talk With a Berks County Inheritance Tax Attorney at Sager & Sager Associates
Understanding PA inheritance tax rates is the first step. Applying them correctly to joint accounts, retirement plans, deductions, and the three-month discount is where executors save money and avoid personal liability. Sager & Sager Associates prepares inheritance tax returns and guides executors through probate from the Register of Wills in Reading to final distribution.
Whether you need help with the REV-1500 as an executor or are a Berks County resident planning ahead, our probate and estate administration attorneys and estate planning attorneys can help. Contact Sager & Sager Associates to schedule a consultation, or call (610) 323-1328.