Trusts & Estates

NH Estate Tax Update:
Late-filed Legislation Would Impose State-Level Tax

May 6, 2010

By Jan P. Myskowski*

Last year, New Hampshire’s Legislature narrowly defeated a bill to introduce a state-level estate tax. That same legislation has just been reintroduced as an amendment to Senate Bill 450, a copy of which is attached.

This amendment (which would impose an estate tax of 8 percent on the portion of the decedent's taxable estate that exceeds $2 million) was approved by the House Ways and Means Committee last week, and by the House Finance Committee on Tuesday of this week, and now needs approval by the Senate and the Governor.

The legislation would replace the existing sponge tax (RSA 87:1) with a “de-coupled” state-level estate tax with a $2 million exemption. Ironically, a $2 million exemption will probably exempt more estates than would be exempt if EGTRRA is allowed to sunset by Congress, in which case New Hampshire’s sponge tax would go back into effect. In that event, because of the status of federal law, New Hampshire’s sponge tax would apply a $1 million exemption (although that figure will be adjusted upward slightly for inflation since 2001).

Our firm will prepare a more detailed analysis of the pending state legislation in the event it is enacted, which should be determined within several weeks.

*Jan P. Myskowski is admitted in New Hampshire and Massachusetts.

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