How To Avoid New York's Fiscal Cliff

Like many states, New York has a progressive tax rate that starts at 3.06% for estates at or over $5.74 million and extends up to 16% for estates that exceed the exemption limit by $10.1 million or more. But unlike other states, if the estate exceeds the exemption level by more than 5%, the New York estate tax is applied to the entire amount of the estate, instead of just the amount over the limit.* The fact that all estate assets are subject to taxation beyond a certain level is known as the New York "Fiscal Cliff." 

For example, in 2021 an estate worth $5.93 million would be subject to $0 taxation, but an estate worth $6.25 million would "fall off" the cliff and be subject to $542,000 in estate taxes to an increase of only $320,000. By employing one of the strategies below to stay below the exemption level, you can save your estate more than $500,000.