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Julie Garber

Estate Taxes by State - Does Montana Have an Estate Tax?

By November 28, 2009

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Does Montana have an estate tax? The answer is no, currently Montana does not collect an estate tax, although things were different a few years ago before major changes took effect with regard to federal estate tax laws. Prior to January 1, 2005, Montana, like many other states, collected a separate state estate tax, called a "pick up tax," that was actually equal to a portion of the overall federal estate tax bill. Montana also does not collect a state inheritance tax as the Montana legislature repealed its inheritance tax effective January 1, 2001.

On January 1, 2005, the state pick up tax was officially phased out under the provisions of the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA"). In response, some states that used to collect a pick up tax chose to enact laws that allow the state to still collect a state estate tax. But Montana, like 31 other states, did nothing, and so Montana does not currently collect an estate tax. The number of states that do not collect an estate tax used to be 32, but Delaware recently enacted a state estate tax beginning on July 1, 2009. For a complete list of the 19 jurisdictions that assess an estate tax at the state level and their current estate tax exemptions, see the State Estate Tax Chart.

One thing to keep in mind is that the pick up tax is scheduled to come back in 2011 due to the sunset of EGTRRA, and if this happens then the Montana estate tax will come back. Of course, no one really believes that Congress and President Obama will allow EGTRRA to sunset. Instead, it is anticipated that at the very least a one year patch will be enacted that will keep the federal estate tax in place and possibly bring back the pick up tax, which has already been proposed by H.R. 2023, introduced by Rep. Jim McDermott (D-WA) in April 2009.

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