Significant Changes to New York State Estate Tax Law

Major changes have been made to New York Estate Tax Law. Read below for a condensed overview. Need the counsel of a New York estate planning lawyer? Contact us to request a consultation. The Law Offices of Alden B. Smith can help.

Overview of the 2014 New York State Tax Law Updates

On March 31, 2014, the New York State Legislature enacted a new estate tax law that increases the New York tax exclusion amount.

  • Effective April 1, 2014 through May 31, 2015, the tax exclusion amount has been increased to $2,062,500.00 for individuals who have or do pass away on or after April 1, 2014 and before April 1, 2015.

  • Effective April 1, 2015 through March 31, 2016, the exclusion amount will be increased to $3,125,000.00.

  • Effective April 1, 2016 through March 31, 2017, the exclusion amount will be increased to $4,187,500.00.

  • Effective April 1,2017 through December 31, 2018, the exclusion amount will be increased to $5,250,000.00.

  • After January 1, 2019, the basic tax exclusion amount will be indexed for inflation with a cost-of-living adjustment pegged from 2010. This should link the NY State exclusion amount to the federal exclusion amount from 2019 onward.

  • For 2014, the federal exclusion amount is $5,340,000.00 and is expected to rise to $5,900,000 in 2019.

Tax Rate: Remains at 16%.

Portability: NY State failed to enact the portability concept first enacted by the Federal Government in 2011. Therefore, New York will have no state-level portability to match the federal scheme.

Phase Out: The benefits of the NY estate tax exclusion amount will be "phased out" for taxable estates between 100% and 105% of the New York exclusion amount. Taxable estates exceeding 105% of the exclusion amount will lose all benefits of exclusion and the entire taxable estate will be subject to New York estate tax.

Three-Year Look Back: New York estate tax law has added a limited three-year look back period for gifts made between April 1, 2014 and January 1, 2019. If a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent's estate so that New York estate tax can be computed. Exclusions include:

  • Gifts made when the decedent was not a NY resident
  • Gifts made by a NY resident before April 1, 2014
  • Gifts made by a NY resident on or after January 1, 2019
  • Gifts that are otherwise includable in the decedent's estate under another provision of the federal estate tax law (prevents gifts from being taxed twice)