Last year North Carolina joined a growing number of states that are considering changes to their estate tax or inheritance tax laws. Currently 21 states and the District of Columbia collect a state estate tax or a state inheritance tax (and Maryland and New Jersey collect both), but Ohio's estate tax has been repealed effective January 1, 2013, Tennessee's estate tax will be completely phased out by January 1, 2016, and Indiana's inheritance tax will disappear on January 1, 2022. In other states, such as Illinois, Maine and Vermont, the state estate tax exemption has been significantly increased over the past few years, and in Rhode Island the state estate exemption is being indexed for inflation. Only one state has reduced the value of its estate tax exemption - in Connecticut, the exemption went from $3.5 million in 2010 to $2 million in 2011 and future years. For a chart showing past and current state estate tax exemptions, refer to my State Estate Tax and Exemption Chart. For an overview of state inheritance tax laws, refer to my State Inheritance Tax Chart.
While legislation that would have repealed North Carolina's estate tax went nowhere in 2012 and in 2013 North Carolina's estate tax exemption equals the current federal exemption of $5.25 million, on February 20 House Republicans were able to garner enough votes to get a new bill to repeal the North Carolina estate tax passed by the House Finance Committee. While it is estimated that only 1 in 500 estates (or 0.2% of estates) will be subject to the North Carolina estate tax, it is projected that $52 million will be lost in revenues for the fiscal year beginning on July 1, 2013, and as much as $66 million will be lost by the 2017 - 2018 fiscal year. The bill is now expected to go before the House Appropriations Committee and may become part of a larger tax overhaul that is being pushed by House and Senate Republicans and GOP Governor Pat McCrory.