Pick-Up Tax

AAA

DEFINITION of 'Pick-Up Tax'

A tax imposed by state authorities based on the estate tax credit the U.S. federal government allows on the federal estate tax return. As this tax is imposed at the state level, the amounts owing vary state to state. And because estates are taxed at the federal level only when the minimum federal estate threshold has been surpassed, state pick-up taxes are not always applied.

INVESTOPEDIA EXPLAINS 'Pick-Up Tax'

States which do not have an estate, or death, tax will "pick up" additional taxes from the estate of the deceased above and beyond what is owed to the feds. This simple method of determining the estate's state-tax liability allows states to avoid having to establish the complex guidelines for an estate tax of their own.

RELATED TERMS
  1. Estate

    All of the valuable things an individual owns, such as real estate, ...
  2. Estate Planning

    The collection of preparation tasks that serve to manage an individual's ...
  3. Estate Tax

    A tax levied on an heir's inherited portion of an estate if the ...
  4. Taxable Estate

    The total value of a deceased person's assets that are subject ...
  5. Inheritance Tax

    In some states in the U.S. (and in the United Kingdom), a tax ...
  6. Section 7702

    The section of the United States Internal Revenue Code that defines ...
Related Articles
  1. Options & Futures

    Getting Started On Your Estate Plan

  2. Retirement

    Skipping-Out on Probate Costs

  3. Personal Finance

    Get Ready For The Estate Tax Phase-Out

  4. Taxes

    Why should I keep records on my tax-exempt ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center