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Ohio Estate Tax Repealed, But Not Yet

03.24.15 written by

On June 30, 2011, Ohio Governor John Kasich signed the State budget and one item in that budget stated that Ohio would be officially abolished its estate tax. However, the estate tax repeal does not go into effect until January 1, 2013. That means for all dates of death until January 1, 2013, an Ohio estate tax will still be in effect.

The Ohio Estate Tax was enacted in 1968 to replace a state inheritance tax, but its roots can be traced back to 1893 when an inheritance tax was enacted during the McKinley administration. The Ohio Estate Tax is a tax which is levied on an individual’s ability to transfer assets after his death to his beneficiaries. The Ohio Estate Tax has been in effect for a number of years and applies to the death of all Ohio residents and also non-Ohio residents who have tangible personal property and/or real estate located in the state of Ohio. 

Historically, the State of Ohio has allowed a credit against the estate tax imposed equal to $500 for persons dying on or after July 1, 1968, but before January 1, 2001 (the actual applicable amount of assets which are exempted for this amount is $25,000); $6,600 for persons dying on or after January 1, 2001, but before January 1, 2002 (the actual applicable amount of assets which are exempted for this amount is $200,000); and currently $13,900 for persons dying on or after January 1, 2009 (the actual applicable amount of assets which are exempted for this amount is $338,333). Tax returns are to be filed within 9 months of death with the probate court of the county of residence unless an extension is granted. However, an automatic 6-month extension is granted to all estates. Also, tax payments are due within 9 months of death regardless of any extension of time to file to the treasurer of the county in which the decedent resided. 

For the calendar year 2011, Ohio is still one of 22 states which still has an estate or inheritance tax. Ohio has an exemption amount of $338,333 per estate and the highest tax rate is 7%. Currently, 80% of the Ohio estate tax collected is returned to the city or township where the decedent resided. The remaining 20% passes to the State of Ohio. In 2009, over 8,000 estate tax returns were filed. On these returns, the State of Ohio collected $333,000,000 of Ohio estate taxes of which $269,000,000 was transferred to local governments and $64,000,000 went to the State of Ohio. For the calendar year 2009, there were 64 Ohio estate tax returns filed in Tuscarawas County with a tax liability of over $1,800,000. That means that in the calendar year 2009, Tuscarawas County municipalities received over $1,440,000 which they will not be receiving in the calendar 2014 and beyond.

It will remain to be seen as to what effect the repeal of the Ohio estate tax will have on various municipalities. It may mean more municipalities developing financial issues, and thus, forced to pass various local tax levies to meet their budgets. It may also mean significant local budget cuts. Therefore, the repeal of the Ohio estate tax may be a good thing for those individuals with a gross estate of more than $338,333 but a bad thing for Ohioans as a whole. We will not know for sure until probably January 1, 2014. Stay tuned.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone: 330-364-3472
Fax: 330-602-3187