Texas Will Never Tax Her Inheritance. Pennsylvania Will Still Bill a Dallas Woman $13,500 on Her Father’s $300,000, Because the Tax Will Follow the Parent, Not the Heir.

A 58-year-old woman in Dallas got the call this spring. Her father, 86, had died in the Pittsburgh house he had owned for four decades. She was his only child, and his will left her everything he had outside the house: a brokerage account and bank CDs worth $300,000 after his funeral bill and final debts were paid.

She assumed her Texas address settled the tax question. Texas has no inheritance tax, and the state repealed its estate tax in 2015. The IRS takes nothing either.

Then the estate attorney in Pittsburgh sent the numbers. Pennsylvania wants $13,500, and the executor has to pay it before the money reaches her.

Pennsylvania Taxes Its Residents’ Estates Wherever the Heirs Live

Pennsylvania’s Department of Revenue states that inheritance tax is imposed by the jurisdiction where the decedent resided. The heir’s state of residence carries no weight. The tax is paid out of the assets of the estate by the administrator/executor or trustee before the assets are distributed.

The rate depends on the heir’s relationship to the person who died, per the department’s REV-584 guidance:

• 0% to a widow or widower, and between parents and children aged 21 or younger
• 4.5% to direct descendants and lineal heirs
• 12% to siblings
• 15% to other heirs

For a Pennsylvania resident, all intangible property, including stocks, bonds, bank accounts, loans receivable, etc., is also taxable, regardless of where it is located. Her father’s Schwab or Fidelity account sitting on a server in another state still counts.

Running the $13,500 Math

Pennsylvania lets the estate deduct funeral and burial expenses, attorney fees, fiduciary fees and the decedent’s unpaid bills. After those deductions, the taxable transfer to the daughter is $300,000.

As his child, she is a lineal heir taxed at 4.5%. That produces a bill of $13,500, leaving her $286,500.

The federal side costs her zero. Those who die in 2026 have a basic exclusion amount of $15,000,000, far above this estate. Under 26 U.S.C. § 102(a), gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. Under § 1014(a)(1), her basis in the brokerage holdings resets to the fair market value of the property at the date of the decedent’s death, so selling soon after his death triggers little or no capital gain.

Pennsylvania’s 4.5% levy is the only tax that applies.

Three Moves That Shrink or Erase the Bill

Pay early. If payment is made within three months of death, a 5% discount of the tax paid or the tax due, whichever is less, applies. On her bill that saves $675 and cuts the tax to $12,825.

Change the parent’s legal residence. For a nonresident deceased, Pennsylvania taxes only real and tangible property located in the state, and intangible personal property of a nonresident decedent is not taxable. Had her father legally moved to Texas, his $300,000 in brokerage and bank accounts would have owed Pennsylvania nothing. A Pittsburgh house kept after the move would remain taxable.

Hold the money as life insurance. The department says life insurance on the life of the decedent is not taxable in the estate of the decedent, provided it is not an annuity. A $300,000 death benefit naming her as beneficiary passes free of Pennsylvania tax.

Joint ownership helps partially. Jointly held accounts are taxed on the decedent’s share, calculated by dividing the value of the joint property by the number of joint owners. With her name on the accounts as a co-owner, only half is taxed, for a bill of $6,750. The catch: if the joint interest was created within a year of death, the full value of the property is taxable in the decedent’s estate, less $3,000.

What Heirs of Pennsylvania Parents Do Now

1. Mark the deadlines. The tax must be reported and remitted before nine months pass from the date of death on the REV-1500 return. Ask the executor to estimate and pay within three months to lock in the discount.
2. Collect every deductible receipt. Funeral home invoices, the burial lot, the grave marker, attorney and executor fees, and final medical bills all reduce the taxable base.
3. Confirm legal residence on paper. A parent planning a move to Texas needs the driver’s license, voter registration, and final Pennsylvania income tax return to match the new address.
4. Audit beneficiary forms with living parents. Ask whether existing life insurance names the right child, and review any joint accounts opened recently.
5. Request date-of-death valuations. The custodian’s statement sets both the Pennsylvania taxable value and her new federal cost basis.

A Pennsylvania estate tax attorney or CPA can match these moves to a family’s specific assets. Most inheritance messes trace back to a outdated beneficiary form or an account named the wrong way, which is why we pulled the full cleanup checklist into a free estate planning guide.

One Rate Follows Every Pennsylvania Dollar

Remember 4.5%. Every dollar a Pennsylvania parent leaves a child carries it, whether the child lives in Dallas or Pittsburgh, and paying within three months brings this $13,500 bill down to $12,825.

Contact [email protected] for any questions or corrections.