Georgia Inheritance Tax: Does Georgia Have An Inheritance Tax?

Inheritance Tax Georgia - Georgia Inheritance Tax - Does Georgia Have An Inheritance Tax - How Much Is Inheritance Tax In Georgia

Does Georgia have an inheritance tax? 

In this article, you’ll learn about: 

  • how much you’ll pay in estate and inheritance taxes in Georgia
  • other taxes you’ll pay on your inheritance
  • how to avoid paying inheritance taxes

Let’s dig in.

Table of Contents

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Does Georgia Have An Inheritance Tax?

Georgia does not have an inheritance tax. 

Beneficiaries who inherit assets in Georgia won’t owe state inheritance tax. 

However, while Georgia skips this tax, beneficiaries should still consider federal estate taxes if the estate is large enough.

Read More: Georgia Inheritance Laws

What Is Inheritance Tax?

An inheritance tax is a tax paid by a person who inherits money or property. 

It’s based on the value of the assets received. 

The tax rate often varies depending on the relationship between the deceased and the beneficiary. 

For example, spouses or children might pay a lower rate than distant relatives or unrelated beneficiaries. 

The specific rules and rates differ from one jurisdiction to another. 

Not all places have an inheritance tax.

Some have an estate tax instead, where the estate itself pays based on its total value. 

Read More: Do You Have To Pay Taxes On Money Inherited From A Trust?

How Much Is Inheritance Tax In Georgia?

Georgia does not have an inheritance tax. 

There is also no state estate tax in Georgia. 

However, there is a federal estate tax that may apply to large estates. 

This federal tax applies to the transfer of property after someone dies. 

The federal estate tax is a tax that’s levied on a deceased person’s assets. 

The federal estate tax ranges from rates of 18% to 40% and generally only applies to assets over $12.92 million. 

This means that if the total value of an estate is less than $12.92 million, no federal estate tax is owed. 

Estates that exceed this amount are subject to the tax on the portion of their value that exceeds the threshold. 

The tax rate can be as high as 40% for amounts above the exemption.

Read More: How Much Does A Living Trust Cost In Georgia

Is Inheritance Taxable In Georgia

While Georgia does not have an inheritance tax, there are other ways an inheritance might be subject to taxes:

  • Income Taxes: If you inherit assets that produce income (like rental properties or dividends), you will owe income tax on that generated income.
  • Capital Gains Tax: If you sell inherited property or assets that have appreciated in value, you may owe capital gains tax on the profit. Beneficiaries often benefit from a “step-up” in basis, which adjusts the asset’s cost basis to its market value at the decedent’s time of death. This can reduce potential capital gains when the asset is sold.
  • Federal Estate Tax: While this is not specific to Georgia, it’s important to note. If the estate is large enough to exceed federal estate tax exemptions, the estate may owe federal estate tax. However, this would typically be paid by the estate itself, not individual beneficiaries.
  • Property Taxes: If you inherit real estate in Georgia, you’ll be responsible for ongoing property taxes. However, inheriting the property doesn’t trigger a new property tax, but you’ll need to ensure the annual property taxes continue to be paid.

Read More: How Much Money Can You Inherit Without Paying Taxes On It?

The Most Common Taxes On Inheritance In Georgia

Inheriting money in Georgia can subject you to a few potential taxes.

Although, Georgia has a relatively tax-friendly stance on inheritances. 

Here are the inheritance taxes you might have in Georgia:

  • Federal Estate Tax: While Georgia doesn’t have its own state estate tax, there’s a federal estate tax that applies to estates exceeding a certain threshold. If the estate you’re inheriting from is large enough, it might be liable for this tax before assets are distributed to beneficiaries.
  • Income Tax: Inherited money typically isn’t taxable, but any income generated from the inherited assets (e.g., dividends from inherited stocks or rental income from inherited property) is subject to income tax.
  • Capital Gains Tax: If you inherit assets like stocks or real estate and then sell them, you could owe capital gains tax on the profit. In Georgia, this would primarily be on the federal level, as Georgia follows the federal treatment for capital gains. The tax is based on the difference between the asset’s value at the time of inheritance (known as the “step-up in basis”) and its selling price.
  • Property Tax: If you inherit real estate in Georgia, you’ll be responsible for annual property taxes on that property. Rates and assessments can vary by county and the property’s value.

Read More: I Inherited A House How Do I Put It In My Name?

How To Avoid Inheritance Tax In Georgia

While you won’t have an inheritance tax, you will pay other taxes on your inheritance. 

Let’s look at ways to reduce those taxes on inherited property in Georgia. 

  • Gift Assets: Give away assets while you’re alive. Many places allow tax-free gifts up to a certain limit each year.
  • Use Trusts: Transfer assets into trusts. Irrevocable trusts can remove assets from your taxable estate.
  • Life Insurance: Get life insurance to provide tax-free money to beneficiaries, helping them cover any potential tax costs.
  • Move Jurisdictions: If possible, consider relocating to an area with no or lower inheritance taxes.
  • Charitable Donations: Leave assets to charities, which typically aren’t subject to inheritance tax.
  • Joint Ownership: Own property jointly so it passes directly to the co-owner upon your death.
  • Exemptions: Familiarize yourself with exemptions, as some beneficiaries (like spouses) often receive assets tax-free.

Read More: How To Avoid Probate In Georgia

Inheritance Tax vs. Estate Tax

Here is a brief summary of inheritance taxes vs. estate taxes: 

  • Estate Tax: This tax is on the entire value of a deceased person’s estate before distribution. The estate’s executor pays it using the estate’s assets. It’s applied at the federal level and in some states.
  • Inheritance Tax: This tax is on the assets received by individual heirs or beneficiaries. The person inheriting the assets pays it. Only a few states have this tax, and there’s no federal inheritance tax.

Read More: How Much Does A Will Cost In Georgia?

Talk To An Estate Planning Lawyer

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At The Hive Law, we understand the importance of:

  • protecting your hard-earned assets
  • ensuring your family’s future
  • dividing and selling property
  • setting up joint ownership agreements for property

We only accommodate a limited number of clients each month.

So don’t miss your opportunity to work with our esteemed estate planning attorneys.

Benefits of our estate planning services:

  • Tailored solutions to fit your unique needs and goals
  • Expert guidance in navigating complex tax and legal matters
  • Preservation of your wealth for future generations
  • Streamlined asset distribution according to your wishes

Avoid the pitfalls of inadequate estate planning:

  • Creditors seizing your assets
  • Lawsuits jeopardizing your family’s financial security
  • Family disputes over inheritance
  • Costly and time-consuming probate processes

Talk soon.

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