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What You Need to Know About the Virginia Estate Tax

The state of Virginia does not have an estate tax – but you still may be subject to the federal estate tax, depending on the size of your estate. If you’re living in the Old Dominion and you’re thinking about estate planning, this guide has all the information you need to know. If you decide you need help with estate planning or any other type of financial planning, you may want to consider hiring a financial advisor. SmartAsset’s financial advisor matching service can help you find the right advisor for you.

Virginia Estate Tax

Virginia has no estate tax. It is one of 38 states not to levy a tax on an estate of any size.

What Is the Estate Tax?

The estate tax is a tax levied against the estate of a recently deceased person, before the money is passed on to their heirs. It is sometimes referred to in the media as the “death tax.”

The estate tax is different from the inheritance tax. The inheritance tax is taken from a person’s heirs after the money has already been transferred to them.

Virginia Inheritance and Gift Tax

What You Need to Know About the Virginia Estate Tax

Virginia does not have an inheritance tax. Another state’s inheritance tax may apply to you if the person leaving you money lived in a state that levies inheritance tax. Pennsylvania has a tax that applies to out-of-state inheritors, for example.

There’s also no gift tax in Virginia. The federal gift tax kicks in for gifts of $14,000 for 2017 and $15,000 for 2018.

Federal Estate Tax

Though there isn’t an estate tax in Virginia, you might have to pay the federal estate tax. The federal estate tax exemption was raised to $11.18 million for 2018, under the new tax legislation that Trump signed at the end of 2017. The exemption is portable for spouses, meaning that with the right legal steps a couple can protect $22.36 million after both spouses have died.

The top tax rate for the federal estate tax is 40%, applying to taxable estates over $1 million. A full chart of federal estate tax rates is below.

Here’s an example of how it works: Let’s say your estate is worth $16 million and you aren’t married. Subtracting the exemption of $11.18 million, leaves you with a taxable estate of $4.82 million. Consulting the chart, you are in the highest bracket. Your base tax payment on the first $1 million is $345,800. You also pay 40% on the remaining $3.82 million, which comes to $1.528 million. That, plus the base of $345,800, means your total tax burden is $1,873,800.

FEDERAL ESTATE TAX RATES
Taxable Estate* Base Taxes Paid Marginal Rate Rate Threshold**
$1 – $10,000 $0 18% $1
$10,000 – $20,000 $1,800 20% $10,000
$20,000 – $40,000 $3,800 22% $20,000
$40,000 – $60,000 $8,200 24% $40,000
$60,000 – $80,000 $13,000 26% $60,000
$80,000 – $100,000 $18,200 28% $80,000
$100,000 – $150,000 $23,800 30% $100,000
$150,000 – $250,000 $38,800 32% $150,000
$250,000 – $500,000 $70,800 34% $250,000
$500,000 – $750,000 $155,800 37% $500,000
$750,000 – $1 million $248,300 39% $750,000
Over $1 million $345,800 40% $1 million

*The taxable estate is the total above the exemption of $11.18 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.

Overall Virginia Tax Picture

What You Need to Know About the Virginia Estate Tax

Virginia is generally tax-friendly toward retirees. Social Security is not taxed and other sources of retirement income are partially taxed. The income tax rate in Virginia ranges from 2% to 5.7%. Our Virginia paycheck calculator can show you what your take home pay will be.

The sales tax in the state ranges from 5.3% to 6%. While Virginia property taxes are below the national average, the high home values in many parts of the state mean the actual payment can still be quite high. This is especially true in northern Virginia, particularly in Fairfax County.

Estate Planning Tips

  • If you still have questions after reading this, you might want to think about enlisting professional help. Whether you’re dealing with a loved one’s estate or just need help with financial planning in general, a financial advisor can help you get on the right track. It is important, though, to find the right advisor. That’s where we can help. SmartAdvisor is SmartAsset’s free financial advisor matching service. You’ll start by answering a few questions about yourself and the program will match you with up to three advisors in your area. They’ll be given your information and will contact you to set up a time to talk. All of the advisors you’ll be matched with have records free from disclosures and are registered financial advisors.
  • Make sure you know what your retirement income will look like when planning your estate. SmartAsset’s retirement calculator can help you figure out what your savings will look like when you retire.
  • It isn’t fun to think about, but make sure you name a guardian for your children when drawing up your will or estate plans. With any luck this particular provision will stop being relevant when they turn 18, but it is still good to plan for the worst.

Photo credit: ©iStock.com/Pgiam, SmartAsset, ©iStock.com/Grafissimo

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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