Wyoming happens to be one of the friendliest taxing states in the country. It has experienced a large population growth as a result of people fleeing higher tax in states.
But tax questions still persist. Does Wyoming have an estate tax, gift tax, or inheritance tax? In this post, will address those questions and give you a few planning strategies.
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Wyoming estate tax
The good news is that Wyoming has no estate tax. Most states in the country do not impose an estate tax. This is true for 38 states in the country.
Even though Wyoming does not have an estate tax, Wyoming residents are still subject to estate tax at the federal level. This tax is paid when net estate assets exceed the federal exemption amount.
Federal estate tax
The federal estate tax has been around for decades. However, less than 1% of estates are subject to it. This is because the exemption threshold is typically very high. But current estate law is ever-changing and it is likely that exemption amounts will decrease and tax rates will increase in future years.
The estate tax is relatively easy to calculate. You just look at assets that are owned including real estate, business interest, mutual funds, stocks and bonds, and other assets held.
Next, you reduce the gross assets by eliminating liabilities, including mortgages and other debts. The final step is to reduce this amount by certain administrative costs and funeral expenses.
The net estate is then compared to the exemption. If the net assets are below the exemption no tax return is required and no state tax is assessed. However if net assets exceed The exemption amount the taxes then levied.
Wyoming inheritance tax and gift tax: how does it work?
Have I mentioned that Wyoming as a low taxing state? Wyoming does not assess a gift tax or an inheritance tax. Therefore, any gifts that are made or inheritance that is received does not need to be tracked at the state level.
The IRS also does not assess an inheritance tax. However, it does have a gift tax that has the same exclusion amount as the estate tax.
Even though Wyoming does not have an inheritance tax, Wyoming residents could be assessed an inheritance tax in another state based on assets held in that state or a decedent passing away in that state.
There is no doubt that Wyoming continues to be a favorite location for low taxes. The states collects receipts from oil and gas and other industries. Therefore, it is able to keep individual taxes assessed at a low level. There is no reason to believe this will change in the near future. However, make sure to stay on top of any estate tax changes.
Even though Wyoming has no estate tax, make sure you plan for any estate tax at the federal level. Very few estates are taxed, but that doesn’t mean that you don’t need to plan. With large increases in stock portfolios and real estate holdings, you may find that you’ve got an estate tax problem before you know it.