They say that death and taxes are the only certainties in life. However, the threshold at which you can be taxed at death is open to legislation.
And that’s why some are raising concerns about a proposal backed by New York City Mayor Zohran Mamdani that could dramatically reshape the state’s estate tax. Mamdani has urged state lawmakers to lower the threshold to estates valued at $750,000 — a drop from the current $7.3 million threshold — while increasing the top rate charged to 50% from 16% (1).
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
Because estate taxes are set at the state level, the mayor cannot change the law himself. Instead, his office circulated the proposal to New York state lawmakers during budget negotiations as one possible way to raise revenue, as the city faces a $12.2 billion budget shortfall through 2027 (2). It’s unlikely to get to a vote anytime soon, however, as the state reportedly didn’t include it in any recently approved budget plans (1).
It also leads to questions about what exactly an estate tax covers, which states impose them and how proper estate planning can minimize the blow.
How state estate taxes work
Estate taxes are paid at death on the portion of the overall value of one’s estate that exceeds the set threshold in that state. For example, if your state has a $5 million threshold, and your estate at death is valued at $6 million, the estate tax would apply to the extra $1 million over the threshold. If your estate is valued below the threshold, you don’t pay the tax…