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In addition to the federal estate tax, many states have taxes on the inheritance of estates, which usually include a cap. Virginia is one such state with limits on inheritance, but most Virginia residents do not have to pay state inheritance taxes.
Misconceptions
According to attorney Diane Reis, inheritance tax applies to each individual who receives property from an estate, and an estate tax is a single payment from the estate's assets. In practice, they are used interchangeably
Considerations
According to FindLaw.com, Virginia does not have an inheritance tax but does have a limit on state estate tax found under Title 58.1, Chapter 9. Virginia's estate tax limit now only applies to deaths before July 1, 2007; deaths after 2007 carry no state estate tax, according to the Virginia Department of Taxation.
Identification
Before elimination of the state inheritance tax, Virginia did not have a specific tax rate but merely charged the federal estate tax rate at the time of death, known as "piggybacking," according to the Virginia Department of Taxation.
The Facts
The federal estate tax limit decreased from 50 percent on estates more than $1 million in 2002 down to 45 percent in 2007 on estates valued more than $3.5 million, according to State Farm Insurance.
Warning
Payments still due on estate taxes for deaths before July 1, 2007, carry a 5 percent late fee.
Source:
Virginia Department of Taxation
Resource:
State Farm Insurance
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