Assembly Actions - Lowercase Senate Actions - UPPERCASE |
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Jan 24, 2023 | referred to budget and revenue |
senate Bill S2782
Establishes separate taxes on inheritance income and on gift income
Sponsored By
Jabari Brisport
(D, WF) 25th Senate District
Current Bill Status - In Senate Committee Budget And Revenue Committee
- Introduced
- In Committee
- On Floor Calendar
- Passed Senate
- Passed Assembly
- Delivered to Governor
- Signed/Vetoed by Governor
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Co-Sponsors
Neil D. Breslin
(D, WF) 46th Senate District
Samra G. Brouk
(D, WF) 55th Senate District
Cordell Cleare
(D) 30th Senate District
Leroy Comrie
(D) 14th Senate District
- view additional co-sponsors
Jeremy A. Cooney
(D, WF) 56th Senate District
Michael Gianaris
(D, WF) 12th Senate District
Kristen Gonzalez
(D, WF) 59th Senate District
Brad Hoylman-Sigal
(D, WF) 47th Senate District
Robert Jackson
(D, WF) 31st Senate District
John C. Liu
(D) 16th Senate District
Rachel May
(D, WF) 48th Senate District
Zellnor Myrie
(D) 20th Senate District
Kevin S. Parker
(D, WF) 21st Senate District
Jessica Ramos
(D, WF) 13th Senate District
Gustavo Rivera
(D, WF) 33rd Senate District
Julia Salazar
(D, WF) 18th Senate District
James Sanders Jr.
(D) 10th Senate District
Luis R. Sepúlveda
(D) 32nd Senate District
José M. Serrano
(D, WF) 29th Senate District
James Skoufis
(D) 42nd Senate District
S2782 (ACTIVE) - Details
- See Assembly Version of this Bill:
- A3193
- Current Committee:
- Senate Budget And Revenue
- Law Section:
- Tax Law
- Laws Affected:
- Amd Tax L, generally
- Versions Introduced in 2021-2022 Legislative Session:
-
S3462, A4643
S2782 (ACTIVE) - Sponsor Memo
BILL NUMBER: S2782 SPONSOR: BRISPORT TITLE OF BILL: An act to amend the tax law, in relation to establishing separate taxes on inheritance income and on gift income, amending the estate tax, and establishing a gift tax SUMMARY OF PROVISIONS: This act amends the tax law to reform the system for taxing inherited wealth by changing the estate tax rates and brackets, introducing a gift tax, and introducing a tax on inherited income, both as a source of funding for general governmental purposes and in order to help reduce racial and economic inequality, the continued growth of which poses an increasingly serious challenge to the maintenance of a stable democratic society. Section 1 of the bill adds a new sections 604 and 604-a to the tax law to create a separate tax within the personal income tax on inheritance income received from an estate, and adds a new section 604-A to the tax law to create a separate tax within the personal income tax on gift
income. Subsection (a) of the proposed section 604 defines "inheritance income" and "family member," and subsection (b) imposes a tax on inheri- tance income. Subsection (c) of proposed section 604 provides that the following will not be considered inheritance income for purposes of the separate tax on inheritance income: inheritances that provide for the payment of certain educational or medical expenses, that are received from the estate of a spouse, or that consist of certain retirement accounts. In addition, such subsection provides that some of the value of certain primary residences and residential homes, and certain family farms and farm equipment, will not be considered inheritance income for purposes of the separate tax on inheritance income. Subsection (d) of such section also provides that payment of the separate tax on inheri- tance income may be deferred until disposition of inherited property consisting of certain primary residences or of certain family-owned businesses. Subsection (a) of proposed section 604-A defines "gift income" and "family member," and subsection (b) imposes a tax on gift income. Subsection (c) of proposed section 604-A of the tax law provides that the following gifts will not be considered gift income for purposes of the separate tax on gift income: gifts for the payment of certain educational and medical expenses, gifts from a spouse, and gifts consisting of certain retirement accounts. Subsection (d) of such section provides that, for gift income consisting of equity interests in certain family businesses, the payment of the separate tax on gift income may be deferred until the taxpayer sells such equity interests. Sections 2 and 4 of the bill add sections 620-B and 640, respectively, to the tax law to allow for a credit against the separate tax on inheri- tance income in the amount of the New York estate tax, or any estate or inheritance tax imposed by another state, a political subdivision of a state, or the District of Columbia, on any inheritance income received by a taxpayer. Proposed section 620-B allows such credit for residents, and proposed section 640 allows such credit for nonresidents and part- year residents. Sections 3 and 4 of the bill add new sections 624-A and 637-A to the tax law to provide for the computation of the separate tax on inheritance income received by residents, nonresidents and part-year residents, and add new sections 624-B and 637-B to provide for the computation of the separate tax on gift income received by residents and part-year resi- dents. Proposed sections 624-A and 637-A of the tax law provide for inheritance income to be taxed at the following rates: No tax on the first $250,000 of an inheritance income; 5% on the amount of inheritance income in excess of $250,000 and up to $500,000; 15% on the amount of inheritance income in excess of $500,000 and up to $1,000,000; 30% on the amount of inheritance income in excess of $1,000,000 and up to $2,000,000; 40% on the amount of inheritance income in excess of $2,000,000 and up to $10,000,000; and 50% on the amount of inheritance income in excess of $10,000,000. Proposed sections 624-B and 637-B provide for gift income to be taxed at the following rates: No tax on the first $50,000 of gift income. 5% on the amount of gift income in excess of $50,000 and up to $100,000; 15% on the amount of gift income in excess of $100,000 and up to $200,000; 30% on the amount of gift income in excess of $200,000 and up to $400,000; 40% on the amount of gift income in excess of $400,000 and up to $2,000,000; and 50% on the amount of gift income in excess of $2,000,000. Section 5 of the bill amends section 951-a of the tax law to define the term "New York taxable gifts." Section 6 of the bill amends section 952 of the tax law to provide for new estate tax rates for decedents dying after April 1, 2021, phase out the applicable credit amount for the estate tax for decedents dying after April 1, 2021, and provide for a credit against the estate tax for the lifetime amount of gift taxes paid. The proposed paragraph (2) of subsection (b) of section 952 provides that for estates of decedents dying after April 1, 2021, estate tax will be determined based on the taxable estate plus the lifetime amount of New York taxable gifts, at the following rates: No tax on the first $750,000 of taxable estate and the lifetime amount of New York taxable gifts; 5% on the estate and gifts in excess of $750,000 and up to $1,500,000; 15% on the estate and gifts in excess of $1,500,000 and up to $3,000,000; 30% on the estate and gifts in excess of $3,000,000 and up to $6,000,000; 40% on the estate and gifts in excess of $6,000,000 and up to $30,000,000; and 50% on the estate and gifts in excess of $30,000,000. Section 7 of the bill amends section 954 of the tax law to provide that the New York gross estate will be reduced by the amount of certain transfers related to educational and medical expenses, and by transfers of property consisting of certain retirement accounts. The proposed amendments to section 954 also provide that the New York gross estate will be reduced by a portion of the value of certain primary residences, residential homes, and family farms and farm equipment. Section 8 of the bill amends section 955 of the tax law to provide that the New York taxable estate will be reduced by the amount of federal estate tax imposed on the estate of a resident. The proposed amendments to section 955 also provide that, with respect to the estate of a dece- dent who was a nonresident of New York on the date of death, the New York taxable estate will be reduced by the amount of federal estate tax allocable to the portion of the estate that is subject to the tax imposed by section 960 of the tax law. Section 9 of the bill adds an article 26-A of the tax law to create a gift tax. Proposed section 1000 of the proposed article 26-A defines the terms "taxable gifts" and "New York taxable gifts." Proposed section 1001 of the proposed article 26-A imposes a tax on the transfer of prop- erty by gift. Proposed section 1002 of the proposed article 26-A provides that the gift tax will be imposed on the aggregate amount of gifts made by a donor during all calendar years commencing on January 1, 2022, but that a credit will be allowed against the tax for the amount of gift tax previously paid to the state by the donor. Such section provides that New York taxable gifts will be taxed at the following rates: No tax on the first $750,000 of New York taxable gifts; 5% on New York taxable gifts in excess of $750,000 and up to $1,500,000; 15% on New York taxable gifts in excess of $1,500,000 and up to $3,000,000; 30% on New York taxable gifts in excess of $3,000,000 and up to $6,000,000; 40% on New York taxable gifts in excess of $6,000,000 and up to $30,000,000; and 50% on New York taxable gifts in excess of $30,000,000. Proposed section 1003 of the proposed article 26-A provides that the commissioner of taxation and finance shall promulgate rules and regu- lations necessary and appropriate to effectuate the provisions of the proposed article. Section 10 of the bill provides that this act shall take effect imme- diately.. JUSTIFICATION: New York is an exceptionally wealthy state. Treated as a separate coun- try, it would have one of the world's largest economies. With such a strong economy, all New Yorkers should have fundamental economic rights: high-quality education, healthcare, guaranteed housing, and basic social services and social insurance. New York must also finance investments in green energy, green jobs, and green infrastructure in order to mitigate the catastrophic risks of climate change. Unfortunately, New York is also the most unequal state in the nation. In part this is because the tax system has not kept pace with changes in the economy, leaving the many high-earning professionals and wealthy families in this state undertaxed. The benefits of economic growth from recent decades has overwhelmingly been hoarded by a small segment of elites, while inflation- adjusted wages have stagnated for the vast majority of working people since the 1970s. The state government, lack- ing adequate tax revenues, has been unable to afford essential public investment and social spending, including upgrading our infrastructure, repairing public housing, protecting public education, and financing Medicaid. State tax policy must focus on mitigating economic inequality. Inter- generational wealth accumulation is one of the main sources of long-term inequality and must therefore be directly addressed by the tax law. New York currently has an estate tax, which imposes a tax on the total assets of a deceased person. However, the current estate tax rate is very low, ranging from 5% to 16%, and it only applies to estates worth more than $5.85 million. This is one of the highest estate tax exemptions in the country, having steadily skyrocketed from $300,000 prior to 2000. An effective inheritance tax is particularly critical for addressing the racial wealth gap. Nationwide, the wealth of the median white household is nearly ten times that of the median Black household, and nearly all of the wealthiest households in the country are white. Without a fair tax on inherited wealth, intergenerational inequality will continue unabated and the racial wealth gap will only worsen. In order to effectively tax intergenerational wealth transfers, we need a comprehensive system of taxes on estates, inheritances, and gifts. This bill lowers the estate tax threshold, with progressive marginal tax rates (as specified in the above summary) applying to estates worth more than $750,000. It would also impose a gift tax, modeled on the federal gift tax, on individuals who give gifts in excess of the lifetime exemption limit, which is equal to the zero-rate bracket for the estate tax ($750,000). Lifetime gifts are treated as part of the estate when estate tax liability is determined, as in the federal estate tax. The gift tax imposed on giftors, however, would not include in taxable gifts any gifts that are subject to tax on the giftee, as discussed below. In addition to amending the estate tax and imposing a gift tax, this bill amends the income tax to treat inheritances and gifts as income to the recipient. Inheritance income would be taxed under the rates speci- fied above, with a credit available for estate tax already paid on the same amount of property. The inheritance tax is imposed on inheritances of more than $250,000. Per the Federal Reserve Board 2019 Survey of Consumer Finances, such a tax only applies to the top 1% of inheritanc- es. The gift tax would be imposed on an annual basis, at the rates spec- ified above, on the receipt of gifts worth more than $50,000. Numerous exceptions are provided to ensure that working people are not overly burdened by these reforms: Spousal transfers are exempt from all of the above taxes. Money used to pay for certain educational or medical expenses is not subject to any of the above taxes. Retirement accounts and pensions are also exempt from the above taxes. In the case of a residence which has been the primary residence of the decedent for ten years prior to death, or is the primary residence of the inheritor for five years after receipt, an additional $1,750,000 is excludible from the taxable value of the property. An exemption from all of the above taxes is also provided for estates or inheritances with a total value of up to $5 million, at least 50% of which is attributable to farmland or farming equipment. Finally, for inheritances that include equity inter- ests in family businesses or primary residences and are worth up to $5 million, tax can be deferred until sale of the inherited assets, provided that the business interests or primary residence makes up over 50% of the total value of the inheritance. The inheritance and gift tax remedies a serious defect in the way we tax income. Currently, income from working is taxed at the highest rates, income from investing is taxed at lower rates, and income from inheri- tance is not taxed at all. In addition to the obvious unfairness of this system, it puts the economic burdens in all the wrong places. Those who earn wage income are most burdened by taxes on their income; heirs, who need not work for their inheritance, are best able to bear the burden of taxation, and yet pay no income tax on their inherited income. Moreover, there is virtually no economic downside to taxing inherited income, as the economic benefits for state spending vastly outweigh any minimal disincentive created by taxing heirs. An inheritance tax is also necessary to counteract avoidance problems with the estate tax. Estate taxes can incentivize wealthy individuals, in their old age, to move out of state to avoid the tax. The inheritors of such wealth, by contrast, typically have families, often with kids in school, and are less likely to relocate solely for tax reasons. There- fore, an inheritance is less likely to be avoided. An inheritance tax also creates an incentive for wealthy individuals to spread their wealth among more beneficiaries, thereby benefiting more people and reducing the intergenerational accumulation of wealth. Reforming wealth transfer taxes is especially important as a means of offsetting the tax benefit of basis step-up, one of the largest federal tax handouts to the wealthy. When a decedent passes on appreciated assets, which would otherwise produce taxable capital gains if they were sold, all of that taxable gain is eliminated by "stepping up" the basis of the asset to its fair market value. The heirs to these appreciated assets, who would otherwise pay substantial tax on their capital gains, end up paying no tax at all. An inheritance tax, by imposing a tax on these inherited assets, offsets some of the benefit of the federal step- up rules. Finally, the inheritance tax helps mitigate the anti-democratic effects of massive intergenerational wealth accumulation. The wealthy use their resources to exert tremendous influence over the political system, stripping away protections for poor and working people, distorting the tax laws, and undermining the very basis of representative democracy. It is imperative that we minimize the power of wealth to unduly influence our political system. PRIOR LEGISLATIVE HISTORY: 2021-22: S3462 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: This act is projected to raise approximately $8 billion dollars annually in new revenue. EFFECTIVE DATE: This bill is effective immediately.
S2782 (ACTIVE) - Bill Text download pdf
S T A T E O F N E W Y O R K ________________________________________________________________________ 2782 2023-2024 Regular Sessions I N S E N A T E January 24, 2023 ___________ Introduced by Sens. BRISPORT, BRESLIN, BROUK, COMRIE, COONEY, GIANARIS, HOYLMAN-SIGAL, JACKSON, LIU, MAY, MYRIE, PARKER, RAMOS, RIVERA, SALA- ZAR, SANDERS, SEPULVEDA, SERRANO, SKOUFIS -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue AN ACT to amend the tax law, in relation to establishing separate taxes on inheritance income and on gift income, amending the estate tax, and establishing a gift tax THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The tax law is amended by adding two new sections 604 and 604-a to read as follows: § 604. SEPARATE TAX ON INHERITANCE INCOME. (A) DEFINITIONS. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (C) OF THIS SECTION, "INHERITANCE INCOME" MEANS ANY INCOME EXCLUDED FOR FEDERAL TAX PURPOSES FROM FEDERAL ADJUSTED GROSS INCOME PURSUANT TO SUBSECTION (A) OF SECTION ONE HUNDRED TWO OF THE INTERNAL REVENUE CODE THAT IS RECEIVED FROM ANY ESTATE, REGARDLESS OF THE RESIDENCE OF THE DECEDENT OF SUCH ESTATE, AFTER THE FEDERAL ESTATE TAX HAS BEEN PAID ON SUCH INCOME. (2) "FAMILY MEMBER" MEANS "MEMBER OF THE FAMILY" AS SUCH TERM IS DEFINED IN PARAGRAPH (2) OF SUBSECTION (E) OF SECTION TWO THOUSAND THIR- TY-TWO-A OF THE INTERNAL REVENUE CODE. (B) IMPOSITION OF SEPARATE TAX. (1) IN ADDITION TO ANY OTHER TAX IMPOSED BY THIS ARTICLE, THERE IS HEREBY IMPOSED FOR EACH TAXABLE YEAR A SEPARATE TAX ON THE TOTAL AMOUNT OF INHERITANCE INCOME RECEIVED FROM ANY ESTATE OF A DECEDENT DURING SUCH TAXABLE YEAR BY ANY INDIVIDUAL WHO WAS A NEW YORK STATE RESIDENT ON THE DATE OF DEATH OF SUCH DECEDENT. (2) THE TAX IMPOSED BY THIS SUBSECTION SHALL BE COMPUTED AS PROVIDED IN SECTION SIX HUNDRED TWENTY-FOUR-A OF THIS ARTICLE WITH RESPECT TO EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03717-01-3
S. 2782 2 RESIDENTS AND SECTION SIX HUNDRED THIRTY-SEVEN-A OF THIS ARTICLE WITH RESPECT TO NONRESIDENTS AND PART-YEAR RESIDENTS. (C) EXCLUSIONS FROM INHERITANCE INCOME. (1) EDUCATIONAL OR MEDICAL EXPENSES. A QUALIFIED TRANSFER, AS SUCH TERM IS DEFINED IN PARAGRAPH (2) OF SUBSECTION (E) OF SECTION TWO THOUSAND FIVE HUNDRED THREE OF THE INTERNAL REVENUE CODE, SHALL NOT BE CONSIDERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION. (2) SPOUSAL TRANSFERS. TRANSFERS OF PROPERTY FROM A SPOUSE SHALL NOT BE CONSIDERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION. (3) RETIREMENT ACCOUNTS. TRANSFERS OF PROPERTY CONSISTING OF PENSIONS, HEALTH SAVINGS ACCOUNTS, OR RETIREMENT ACCOUNTS ESTABLISHED PURSUANT TO SECTIONS FOUR HUNDRED ONE, FOUR HUNDRED THREE, FOUR HUNDRED EIGHT, FOUR HUNDRED EIGHT-A, OR FOUR HUNDRED FIFTY-SEVEN OF THE INTERNAL REVENUE CODE SHALL NOT BE CONSIDERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION. (4) CERTAIN RESIDENCES. AN INDIVIDUAL SUBJECT TO THE TAX IMPOSED BY THIS SECTION MAY CLAIM NOT MORE THAN ONE OF THE FOLLOWING EXCLUSIONS FROM INHERITANCE INCOME, AND MAY NOT CLAIM EITHER SUCH EXCLUSION FOR MORE THAN ONE TRANSFER OF REAL PROPERTY: (A) PRIMARY RESIDENCES. FOR REAL PROPERTY TRANSFERRED TO A RESIDENT, NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUAL THAT (I) SERVES AS THE PRIMARY RESIDENCE OF THE TRANSFEROR OF SUCH PROPERTY OR OF THE RESIDENT, NONRESIDENT, OR PART-YEAR RESIDENT TRANSFEREE FOR THE TEN CONSECUTIVE YEARS PRECEDING SUCH TRANSFER OR (II) SERVES AS THE PRIMARY RESIDENCE OF SUCH TRANSFEREE FOR THE FIVE CONSECUTIVE YEARS FOLLOWING SUCH TRANSFER, UP TO ONE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS OF THE VALUE OF SUCH PROPERTY SHALL NOT BE CONSIDERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION. (B) RESIDENTIAL HOMES PURCHASED WITH A FEDERAL HOUSING ADMINISTRATION INSURED MORTGAGE. FOR A RESIDENTIAL HOME TRANSFERRED TO A RESIDENT, NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUAL THAT WAS PURCHASED WITH A FEDERAL HOUSING ADMINISTRATION INSURED MORTGAGE, UP TO SEVEN HUNDRED FIFTY THOUSAND DOLLARS OF THE VALUE OF SUCH HOME SHALL NOT BE CONSIDERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION. (5) FAMILY FARMS. A TRANSFER TO A RESIDENT, NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUAL FROM THE ESTATE OF A DECEDENT WHO IS A FAMILY MEMBER OF SUCH INDIVIDUAL OF FARMLAND AND FARM EQUIPMENT SHALL NOT BE CONSID- ERED INHERITANCE INCOME FOR PURPOSES OF THIS SECTION PROVIDED THAT THE TOTAL VALUE OF INHERITANCE INCOME (INCLUDING THE VALUE OF SUCH FARMLAND AND FARM EQUIPMENT) RECEIVED BY SUCH INDIVIDUAL FROM SUCH ESTATE DOES NOT EXCEED FIVE MILLION DOLLARS, AND PROVIDED FURTHER THAT THE VALUE OF SUCH FARMLAND AND EQUIPMENT CONSTITUTES OVER FIFTY PERCENT OF THE TOTAL VALUE OF SUCH INHERITANCE INCOME RECEIVED FROM SUCH ESTATE. (D) DEFERRALS. (1) PRIMARY RESIDENCE LIQUIDITY DEFERRAL. A RESIDENT, NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUAL WHO IN A TAXABLE YEAR RECEIVES FROM A SINGLE ESTATE INHERITANCE INCOME TOTALING LESS THAN FIVE MILLION DOLLARS, OVER FIFTY PERCENT OF THE TOTAL VALUE OF WHICH CONSISTS OF REAL PROPERTY THAT WILL SERVE AS THE PRIMARY RESIDENCE OF SUCH INDI- VIDUAL, MAY ELECT TO DEFER PAYMENT OF THE TAX IMPOSED BY THIS SECTION UNTIL THE TIME AT WHICH SUCH INDIVIDUAL SELLS SUCH REAL PROPERTY OR CEASES USING SUCH PROPERTY AS A PRIMARY RESIDENCE. (2) FAMILY-OWNED BUSINESS LIQUIDITY DEFERRAL. (A) A RESIDENT, NONRESI- DENT OR PART-YEAR RESIDENT INDIVIDUAL WHO IN A TAXABLE YEAR RECEIVES FROM THE ESTATE OF A DECEDENT WHO IS A FAMILY MEMBER OF SUCH INDIVIDUAL INHERITANCE INCOME TOTALING LESS THAN FIVE MILLION DOLLARS, OVER FIFTY PERCENT OF THE TOTAL VALUE OF WHICH CONSISTS OF EQUITY INTERESTS IN A S. 2782 3 FAMILY-OWNED BUSINESS, MAY ELECT TO DEFER PAYMENT OF THE TAX IMPOSED BY THIS SECTION UNTIL THE TIME AT WHICH SUCH INDIVIDUAL SELLS SUCH BUSI- NESS, PROVIDED THAT DURING THE TIME OF DEFERRAL INTEREST WILL ACCRUE ON THE AMOUNT OF SUCH TAX AT A RATE EQUAL TO THE FEDERAL SHORT-TERM RATE AS PROVIDED UNDER PARAGRAPH THREE OF SUBSECTION (J) OF SECTION SIX HUNDRED NINETY-SEVEN OF THIS ARTICLE. (B) FOR THE PURPOSES OF THIS PARAGRAPH, "FAMILY-OWNED BUSINESS" MEANS A BUSINESS FOR WHICH, AT THE TIME OWNERSHIP OF SUCH BUSINESS IS TRANS- FERRED TO A RESIDENT, NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUAL, THE TRANSFEROR OF SUCH BUSINESS OR FAMILY MEMBERS OF SUCH TRANSFEROR COLLEC- TIVELY HAVE RETAINED MAJORITY OWNERSHIP AND HAVE MATERIALLY PARTICIPATED IN THE OPERATION OF SUCH BUSINESS FOR THE TEN CONSECUTIVE YEARS PROCEED- ING SUCH TRANSFER. § 604-A. SEPARATE TAX ON GIFT INCOME. (A) DEFINITIONS. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: (1) "GIFT INCOME" MEANS THE VALUE OF ANY TAXABLE GIFTS, AS SUCH TERM IS DEFINED IN SECTION ONE THOUSAND OF THIS CHAPTER, RECEIVED BY AN INDI- VIDUAL WHO IS A NEW YORK STATE RESIDENT AT THE TIME OF RECEIVING SUCH GIFTS. (2) "FAMILY MEMBER" MEANS "MEMBER OF THE FAMILY" AS SUCH TERM IS DEFINED IN PARAGRAPH (2) OF SUBSECTION (E) OF SECTION TWO THOUSAND THIR- TY-TWO-A OF THE INTERNAL REVENUE CODE. (B) IMPOSITION OF SEPARATE TAX. (1) IN ADDITION TO ANY OTHER TAX IMPOSED BY THIS ARTICLE, THERE IS HEREBY IMPOSED FOR EACH TAXABLE YEAR A SEPARATE TAX ON GIFT INCOME RECEIVED DURING SUCH TAXABLE YEAR BY ANY RESIDENT OR PART-YEAR RESIDENT INDIVIDUAL. (2) THE TAX IMPOSED BY THIS SECTION SHALL BE COMPUTED AS PROVIDED IN SECTION SIX HUNDRED TWENTY-FOUR-B OF THIS ARTICLE WITH RESPECT TO RESI- DENTS AND SECTION SIX HUNDRED THIRTY-SEVEN-B OF THIS ARTICLE WITH RESPECT TO PART-YEAR RESIDENTS. (C) EXCLUSIONS FROM GIFT INCOME. (1) EDUCATIONAL OR MEDICAL EXPENSES. A QUALIFIED TRANSFER, AS SUCH TERM IS DEFINED IN PARAGRAPH (2) OF SUBSECTION (E) OF SECTION TWO THOUSAND THREE OF THE INTERNAL REVENUE CODE, SHALL NOT BE CONSIDERED GIFT INCOME FOR PURPOSES OF THIS SECTION. (2) SPOUSAL TRANSFERS. TRANSFERS OF PROPERTY FROM A SPOUSE SHALL NOT BE CONSIDERED GIFT INCOME FOR PURPOSES OF THIS SECTION. (3) RETIREMENT ACCOUNTS. TRANSFERS OF PROPERTY CONSISTING OF PENSIONS, HEALTH SAVINGS ACCOUNTS, OR RETIREMENT ACCOUNTS ESTABLISHED PURSUANT TO SECTIONS FOUR HUNDRED ONE, FOUR HUNDRED THREE, FOUR HUNDRED EIGHT, FOUR HUNDRED EIGHT-A, OR FOUR HUNDRED FIFTY-SEVEN OF THE INTERNAL REVENUE CODE SHALL NOT BE CONSIDERED GIFT INCOME FOR PURPOSES OF THIS SECTION. (4) FAMILY FARMS. A TRANSFER TO A RESIDENT OR PART-YEAR RESIDENT INDI- VIDUAL FROM A DONOR WHO IS A FAMILY MEMBER OF SUCH INDIVIDUAL OF FARM- LAND AND FARM EQUIPMENT SHALL NOT BE CONSIDERED GIFT INCOME FOR PURPOSES OF THIS SECTION PROVIDED THAT THE TOTAL VALUE OF GIFT INCOME (INCLUDING THE VALUE OF SUCH FARMLAND AND FARM EQUIPMENT) RECEIVED BY SUCH INDIVID- UAL FROM SUCH DONOR DOES NOT EXCEED ONE MILLION DOLLARS. (D) FAMILY-OWNED BUSINESS LIQUIDITY DEFERRAL. (1) A RESIDENT OR PART- YEAR RESIDENT INDIVIDUAL WHO IN A TAXABLE YEAR RECEIVES FROM A DONOR WHO IS A FAMILY MEMBER OF SUCH INDIVIDUAL GIFT INCOME TOTALING LESS THAN FIVE MILLION DOLLARS, OVER FIFTY PERCENT OF THE TOTAL VALUE OF WHICH CONSISTS OF EQUITY INTERESTS IN A FAMILY-OWNED BUSINESS, MAY ELECT TO DEFER PAYMENT OF THE TAX IMPOSED BY THIS SECTION UNTIL THE TIME AT WHICH SUCH INDIVIDUAL SELLS SUCH EQUITY INTERESTS, PROVIDED THAT DURING THE TIME OF DEFERRAL INTEREST WILL ACCRUE ON THE AMOUNT OF SUCH TAX AT A S. 2782 4 RATE EQUAL TO THE FEDERAL SHORT-TERM RATE AS PROVIDED UNDER PARAGRAPH THREE OF SUBSECTION (J) OF SECTION SIX HUNDRED NINETY-SEVEN OF THIS ARTICLE. (2) FOR THE PURPOSES OF THIS SUBSECTION, "FAMILY-OWNED BUSINESS" MEANS A BUSINESS FOR WHICH, AT THE TIME OWNERSHIP OF SUCH BUSINESS IS TRANS- FERRED TO A RESIDENT OR PART-YEAR RESIDENT INDIVIDUAL, THE TRANSFEROR OF SUCH BUSINESS OR FAMILY MEMBERS OF SUCH TRANSFEROR COLLECTIVELY HAVE RETAINED MAJORITY OWNERSHIP AND HAVE MATERIALLY PARTICIPATED IN THE OPERATION OF SUCH BUSINESS FOR THE TEN CONSECUTIVE YEARS PROCEEDING SUCH TRANSFER. § 2. The tax law is amended by adding a new section 620-b to read as follows: § 620-B. CREDIT AGAINST SEPARATE TAX ON INHERITANCE INCOME. A RESIDENT SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY SECTION SIX HUNDRED FOUR OF THIS ARTICLE IN THE AMOUNT OF THE ESTATE TAX IMPOSED BY ARTICLE TWENTY-SIX OF THIS CHAPTER OR ANY ESTATE OR INHERITANCE TAX IMPOSED BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, UPON ANY INHERITANCE INCOME, AS SUCH TERM IS DEFINED IN SUCH SECTION, RECEIVED BY SUCH RESIDENT IN A TAXABLE YEAR. SUCH RESIDENT MAY ELECT TO CALCULATE THE AMOUNT OF SUCH CREDIT IN ACCORDANCE WITH EITHER SUBSECTION (A) OR SUBSECTION (B) OF THIS SECTION. (A) THE AMOUNT OF CREDIT ALLOWED PURSUANT TO THIS SECTION MAY BE CALCULATED BY MULTIPLYING THE TOTAL AMOUNT OF ESTATE OR INHERITANCE TAX IMPOSED BY THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA ON THE ESTATE FROM WHICH SUCH RESIDENT HAS RECEIVED INHERITANCE INCOME BY A FRACTION, THE NUMERATOR OF WHICH IS THE AMOUNT OF INHERITANCE INCOME RECEIVED BY SUCH RESIDENT FROM SUCH ESTATE AND THE DENOMINATOR OF WHICH IS THE TOTAL VALUE OF SUCH ESTATE AFTER THE FEDERAL ESTATE TAX HAS BEEN PAID BUT BEFORE THE ESTATE TAX OF THIS STATE, OR ANY ESTATE OR INHERITANCE TAX IMPOSED BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, HAS BEEN PAID. IN ORDER TO CALCULATE SUCH CREDIT IN ACCORDANCE WITH THIS SUBSECTION, SUCH RESIDENT MUST KNOW THE TOTAL AMOUNT OF ESTATE OR INHERITANCE TAX IMPOSED ON SUCH ESTATE BY THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA AND THE TOTAL VALUE OF SUCH ESTATE AFTER THE FEDERAL ESTATE TAX HAS BEEN PAID BUT BEFORE THE ESTATE OR INHERITANCE TAX OF THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, HAS BEEN PAID. (B) THE AMOUNT OF CREDIT ALLOWED PURSUANT TO THIS SECTION MAY BE CALCULATED AS EQUAL TO THE AMOUNT OF ESTATE TAX OR INHERITANCE TAX OF THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, THAT WOULD BE IMPOSED ON THE ESTATE FROM WHICH SUCH RESIDENT RECEIVES INHERITANCE INCOME AS IF SUCH INHERITANCE INCOME WERE EQUAL TO THE TOTAL VALUE OF SUCH ESTATE. § 3. The tax law is amended by adding two new sections 624-a and 624-b to read as follows: § 624-A. COMPUTATION OF SEPARATE TAX ON INHERITANCE INCOME RECEIVED BY A RESIDENT INDIVIDUAL. THE AMOUNT OF TAX IMPOSED UNDER SECTION SIX HUNDRED FOUR OF THIS ARTICLE FOR ANY TAXABLE YEAR, WITH RESPECT TO INHERITANCE INCOME RECEIVED BY A RESIDENT INDIVIDUAL, SHALL BE DETER- MINED IN ACCORDANCE WITH THE FOLLOWING TABLE: FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND TWENTY-TWO: IF THE INHERITANCE INCOME IS: THE TAX IS: NOT OVER $250,000 0% OF INHERITANCE INCOME S. 2782 5 OVER $250,000 BUT NOT OVER $500,000 $0 PLUS 5% OF EXCESS OVER $250,000 OVER $500,000 BUT NOT OVER $12,500 PLUS 15% OF EXCESS OVER $1,000,000 $500,000 OVER $1,000,000 BUT NOT OVER $87,500 PLUS 30% OF EXCESS OVER $2,000,000 $1,000,000 OVER $2,000,000 BUT NOT OVER $387,000 PLUS 40% OF EXCESS OVER $10,000,000 $2,000,000 OVER $10,000,000 $3,587,500 PLUS 50% OF EXCESS OVER $10,000,000 § 624-B. COMPUTATION OF SEPARATE TAX ON GIFT INCOME RECEIVED BY A RESIDENT INDIVIDUAL. THE AMOUNT OF TAX IMPOSED UNDER SECTION SIX HUNDRED FOUR-A OF THIS PART FOR ANY TAXABLE YEAR, WITH RESPECT TO GIFT INCOME RECEIVED BY A RESIDENT INDIVIDUAL, SHALL BE DETERMINED IN ACCORDANCE WITH THE FOLLOWING TABLE: IF THE GIFT INCOME IS: THE TAX IS: NOT OVER $50,000 0% OF GIFT INCOME OVER $50,000 BUT NOT OVER $100,000 $0 PLUS 5% OF EXCESS OVER $50,000 OVER $100,000 BUT NOT OVER $2,500 PLUS 15% OF EXCESS OVER $200,000 $100,000 OVER $200,000 BUT NOT OVER $17,500 PLUS 30% OF EXCESS OVER $400,000 $200,000 OVER $400,000 BUT NOT OVER $77,500 PLUS 40% OF EXCESS OVER $2,000,000 $400,000 OVER $2,000,000 $717,500 PLUS 50% OF EXCESS OVER $2,000,000 § 4. The tax law is amended by adding three new sections 637-a, 637-b and 640 to read as follows: § 637-A. COMPUTATION OF SEPARATE TAX ON INHERITANCE INCOME RECEIVED BY NONRESIDENT OR PART-YEAR RESIDENT INDIVIDUALS. THE AMOUNT OF TAX IMPOSED UNDER SECTION SIX HUNDRED FOUR OF THIS ARTICLE FOR ANY TAXABLE YEAR, WITH RESPECT TO INHERITANCE INCOME RECEIVED BY A NONRESIDENT OR PART- YEAR RESIDENT INDIVIDUAL, SHALL BE DETERMINED IN ACCORDANCE WITH THE FOLLOWING TABLE: (A) FOR TAXABLE YEARS BEGINNING AFTER TWO THOUSAND TWENTY-TWO: IF THE INHERITANCE INCOME IS: THE TAX IS: NOT OVER $250,000 0% OF INHERITANCE INCOME OVER $250,000 BUT NOT OVER $500,000 $0 PLUS 5% OF EXCESS OVER $250,000 OVER $500,000 BUT NOT OVER $12,500 PLUS 15% OF EXCESS OVER $1,000,000 $500,000 OVER $1,000,000 BUT NOT OVER $87,500 PLUS 30% OF EXCESS OVER $2,000,000 $1,000,000 OVER $2,000,000 BUT NOT OVER $387,000 PLUS 40% OF EXCESS $10,000,000 OVER $2,000,000 OVER $10,000,000 $3,587,500 PLUS 50% OF EXCESS OVER $10,000,000 § 637-B. COMPUTATION OF SEPARATE TAX ON GIFT INCOME RECEIVED BY PART- YEAR RESIDENT INDIVIDUALS. THE AMOUNT OF TAX IMPOSED UNDER SECTION SIX HUNDRED FOUR-A OF THIS ARTICLE FOR ANY TAXABLE YEAR, WITH RESPECT TO GIFT INCOME RECEIVED BY A PART-YEAR RESIDENT INDIVIDUAL, SHALL BE DETER- MINED IN ACCORDANCE WITH THE FOLLOWING TABLE: IF THE GIFT INCOME IS: THE TAX IS: NOT OVER $50,000 0% OF GIFT INCOME OVER $50,000 BUT NOT OVER $100,000 $0 PLUS 5% OF EXCESS OVER $50,000 OVER $100,000 BUT NOT OVER $200,000 $2,500 PLUS 15% OF EXCESS OVER $100,000 OVER $200,000 BUT NOT OVER $17,500 PLUS 30% OF EXCESS OVER S. 2782 6 $400,000 $200,000 OVER $400,000 BUT NOT OVER $77,500 PLUS 40% OF EXCESS OVER $2,000,000 $400,000 OVER $2,000,000 $717,500 PLUS 50% OF EXCESS OVER $2,000,000 § 640. CREDITS AGAINST SEPARATE TAX ON INHERITANCE INCOME. A NONRESI- DENT OR PART-YEAR RESIDENT INDIVIDUAL SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY SECTION SIX HUNDRED FOUR OF THIS ARTICLE IN THE AMOUNT OF THE ESTATE TAX IMPOSED BY ARTICLE TWENTY-SIX OF THIS CHAPTER, OR OF ANY ESTATE OR INHERITANCE TAX IMPOSED BY ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, UPON ANY INHERITANCE INCOME, AS SUCH TERM IS DEFINED IN SUCH SECTION, RECEIVED BY SUCH INDIVIDUAL IN A TAXABLE YEAR. SUCH INDIVIDUAL MAY ELECT TO CALCULATE THE AMOUNT OF SUCH CREDIT IN ACCORDANCE WITH EITHER SUBSECTION (A) OR SUBSECTION (B) OF THIS SECTION. (A) THE AMOUNT OF CREDIT ALLOWED PURSUANT TO THIS SECTION MAY BE CALCULATED BY MULTIPLYING THE TOTAL AMOUNT OF ESTATE OR INHERITANCE TAX IMPOSED BY THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA ON THE ESTATE FROM WHICH SUCH INDIVIDUAL HAS RECEIVED INHERITANCE INCOME BY A FRAC- TION, THE NUMERATOR OF WHICH IS THE AMOUNT OF INHERITANCE INCOME RECEIVED BY SUCH INDIVIDUAL FROM SUCH ESTATE AND THE DENOMINATOR OF WHICH IS THE TOTAL VALUE OF SUCH ESTATE AFTER THE FEDERAL ESTATE TAX HAS BEEN PAID BUT BEFORE THE ESTATE TAX OF THIS STATE, OR ANY ESTATE OR INHERITANCE TAX IMPOSED BY ANOTHER STATE OF THE UNITED STATES, A POLI- TICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, HAS BEEN PAID. IN ORDER TO CALCULATE SUCH CREDIT IN ACCORDANCE WITH THIS SUBSECTION, SUCH INDIVIDUAL MUST KNOW THE TOTAL AMOUNT OF ESTATE OR INHERITANCE TAX IMPOSED ON SUCH ESTATE BY THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA AND THE TOTAL VALUE OF SUCH ESTATE AFTER THE FEDER- AL ESTATE TAX HAS BEEN PAID BUT BEFORE THE ESTATE OR INHERITANCE TAX OF THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, HAS BEEN PAID. (B) THE AMOUNT OF CREDIT ALLOWED PURSUANT TO THIS SECTION MAY BE CALCULATED AS EQUAL TO THE AMOUNT OF ESTATE TAX OR INHERITANCE TAX OF THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA THAT WOULD BE IMPOSED ON THE ESTATE FROM WHICH SUCH INDIVIDUAL RECEIVES INHERITANCE INCOME AS IF SUCH INHERITANCE INCOME WERE EQUAL TO THE TOTAL VALUE OF SUCH ESTATE. § 5. Section 951-a of the tax law is amended by adding a new subsection (g) to read as follows: (G) THE TERM "NEW YORK TAXABLE GIFTS" HAS THE SAME MEANING AS PROVIDED IN SECTION ONE THOUSAND OF THIS CHAPTER. § 6. Section 952 of the tax law, as amended by section 2 of part X of chapter 59 of the laws of 2014, subsection (b) as amended by section 1 of part BB of chapter 59 of the laws of 2015, is amended to read as follows: § 952. Tax imposed. (a) A tax is hereby imposed on the transfer of the New York estate by every deceased individual who at his or her death was a resident of New York state. (b) Computation of tax. The tax imposed by this section shall be computed on the deceased resident's New York taxable estate as follows: (1) IN THE CASE OF DECEDENTS DYING BEFORE APRIL 1, 2023: S. 2782 7 If the New York taxable estate is: The tax is: Not over $500,000 3.06% of taxable estate Over $500,000 but not over $1,000,000 $15,300 plus 5.0% of excess over $500,000 Over $1,000,000 but not over $1,500,000 $40,300 plus 5.5% of excess over $1,000,000 Over $1,500,000 but not over $2,100,000 $67,800 plus 6.5% of excess over $1,500,000 Over $2,100,000 but not over $2,600,000 $106,800 plus 8.0% of excess over $2,100,000 Over $2,600,000 but not over $3,100,000 $146,800 plus 8.8% of excess over $2,600,000 Over $3,100,000 but not over $3,600,000 $190,800 plus 9.6% of excess over $3,100,000 Over $3,600,000 but not over $4,100,000 $238,800 plus 10.4% of excess over $3,600,000 Over $4,100,000 but not over $5,100,000 $290,800 plus 11.2% of excess over $4,100,000 Over $5,100,000 but not over $6,100,000 $402,800 plus 12.0% of excess over $5,100,000 Over $6,100,000 but not over $7,100,000 $522,800 plus 12.8% of excess over $6,100,000 Over $7,100,000 but not over $8,100,000 $650,800 plus 13.6% of excess over $7,100,000 Over $8,100,000 but not over $9,100,000 $786,800 plus 14.4% of excess over $8,100,000 Over $9,100,000 but not over $930,800 plus 15.2% of excess over $10,100,000 $9,100,000 Over $10,100,000 $1,082,800 plus 16.0% of excess over $10,100,000 (2) IN THE CASE OF DECEDENTS DYING ON OR AFTER APRIL 1, 2023: IF THE NEW YORK TAXABLE ESTATE PLUS THE TAX IS: THE LIFETIME AMOUNT OF NEW YORK TAXABLE GIFTS IS: NOT OVER $750,000 0% OF TAXABLE ESTATE OVER $750,000 BUT NOT OVER $0 PLUS 5% OF EXCESS OVER $750,000 $1,500,000 OVER $1,500,000 BUT NOT OVER $37,500 PLUS 15% OF EXCESS OVER $3,000,000 $1,500,000 OVER $3,000,000 BUT NOT OVER $262,500 PLUS 30% OF EXCESS OVER $6,000,000 $3,000,000 OVER $6,000,000 BUT NOT OVER $1,162,500 PLUS 40% OF EXCESS $30,000,000 OVER $6,000,000 OVER $30,000,000 $10,762,500 PLUS 50% OF EXCESS OVER $30,000,000 (c) Applicable credit amount. (1) [A] IN THE CASE OF ANY DECEDENT DYING BEFORE APRIL FIRST, TWO THOUSAND TWENTY-THREE, A credit of the applicable credit amount shall be allowed against the tax imposed by this section as provided in this subsection. In the case of SUCH a dece- dent whose New York taxable estate is less than or equal to the basic exclusion amount, the applicable credit amount shall be the amount of tax that would be due under subsection (b) of this section on such decedent's New York taxable estate. In the case of SUCH a decedent whose New York taxable estate exceeds the basic exclusion amount by an amount that is less than or equal to five percent of such amount, the applica- ble credit amount shall be the amount of tax that would be due under S. 2782 8 subsection (b) of this section if the amount on which the tax is to be computed were equal to the basic exclusion amount multiplied by one minus a fraction, the numerator of which is the decedent's New York taxable estate minus the basic exclusion amount, and the denominator of which is five percent of the basic exclusion amount. Provided, however, that the credit allowed by this subsection shall not exceed the tax imposed by this section, and no credit shall be allowed to the estate of any decedent whose New York taxable estate exceeds one hundred five percent of the basic exclusion amount. (2) (A) For purposes of this section, the basic exclusion amount shall be as follows: In the case of decedents dying on or after: The basic exclusion amount is: April 1, 2014 and before April 1, 2015 $ 2,062,500 April 1, 2015 and before April 1, 2016 3,125,000 April 1, 2016 and before April 1, 2017 4,187,500 April 1, 2017 and before January 1, 2019 5,250,000 (B) In the case of any decedent dying [in a calendar year beginning] on or after January first, two thousand nineteen AND BEFORE APRIL FIRST, TWO THOUSAND TWENTY-THREE, the basic exclusion amount shall be equal to: (i) five million dollars, multiplied by (ii) one plus the cost-of-living adjustment, which shall be the percentage by which the consumer price index for the preceding calendar year exceeds the consumer price index for calendar year two thousand ten. (C) (i) For purposes of this paragraph, "consumer price index" means the most recent consumer price index for all-urban consumers published by the United States department of labor. (ii) For purposes of clause (ii) of subparagraph (B) of this para- graph, the consumer price index for any calendar year shall be the aver- age of the consumer price index as of the close of the twelve-month period ending on August thirty-first of such calendar year. (iii) If any amount adjusted under this paragraph is not a multiple of ten thousand dollars, such amount shall be rounded to the nearest multi- ple of ten thousand dollars. (D) CREDIT FOR LIFETIME GIFT TAXES PAID. IN THE CASE OF A DECEDENT DYING ON OR AFTER APRIL FIRST, TWO THOUSAND TWENTY-THREE, A CREDIT SHALL BE ALLOWED AGAINST THE TAX IMPOSED BY THIS SECTION EQUAL TO THE TOTAL AMOUNT OF GIFT TAX IMPOSED BY SECTION ONE THOUSAND ONE OF THIS CHAPTER PAID BY SUCH DECEDENT DURING THE LIFETIME OF SUCH DECEDENT. § 7. Subsection (a) of section 954 of the tax law is amended by adding six new paragraphs 5, 6, 7, 8, 9 and 10 to read as follows: (5) REDUCED BY THE AMOUNT OF ANY QUALIFIED TRANSFER, AS SUCH TERM IS DEFINED IN PARAGRAPH (2) OF SUBSECTION (E) OF SECTION TWO THOUSAND FIVE HUNDRED THREE OF THE INTERNAL REVENUE CODE, TO THE EXTENT THE AMOUNT OF SUCH TRANSFER IS INCLUDED IN THE DECEDENT'S FEDERAL GROSS ESTATE. (6) REDUCED BY THE VALUE OF ANY TRANSFERS OF PROPERTY CONSISTING OF PENSIONS, HEALTH SAVINGS ACCOUNTS, OR RETIREMENT ACCOUNTS ESTABLISHED PURSUANT TO SECTIONS FOUR HUNDRED ONE, FOUR HUNDRED THREE, FOUR HUNDRED EIGHT, FOUR HUNDRED EIGHT-A, OR FOUR HUNDRED FIFTY-SEVEN OF THE INTERNAL REVENUE CODE TO THE EXTENT THE AMOUNT OF ANY SUCH TRANSFER IS INCLUDED IN THE DECEDENT'S FEDERAL GROSS ESTATE. (7) REDUCED BY ONE OF THE FOLLOWING, BUT NOT BOTH, WITH RESPECT TO NOT MORE THAN ONE TRANSFER OF REAL PROPERTY: (A) UP TO ONE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS OF THE VALUE OF REAL PROPERTY TRANSFERRED TO AN INDIVIDUAL THAT (I) SERVED AS S. 2782 9 THE PRIMARY RESIDENCE OF THE DECEDENT OR OF SUCH INDIVIDUAL FOR THE TEN CONSECUTIVE YEARS PRECEDING SUCH TRANSFER OR (II) SERVES AS THE PRIMARY RESIDENCE OF SUCH INDIVIDUAL FOR THE FIVE CONSECUTIVE YEARS FOLLOWING SUCH TRANSFER TO THE EXTENT THE VALUE OF SUCH REAL PROPERTY IS INCLUDED IN THE DECEDENT'S FEDERAL GROSS ESTATE; OR (B) UP TO SEVEN HUNDRED FIFTY THOUSAND DOLLARS OF THE VALUE OF A RESI- DENTIAL HOME THAT WAS PURCHASED WITH A FEDERAL HOUSING ADMINISTRATION INSURED MORTGAGE TO THE EXTENT THE VALUE OF SUCH RESIDENTIAL HOME IS INCLUDED IN THE DECEDENT'S FEDERAL GROSS ESTATE. (8) REDUCED BY THE VALUE OF FARMLAND AND FARM EQUIPMENT TRANSFERRED TO AN INDIVIDUAL FROM THE ESTATE OF A FAMILY MEMBER OF SUCH INDIVIDUAL TO THE EXTENT THE VALUE OF SUCH FARMLAND AND EQUIPMENT IS INCLUDED IN THE DECEDENT'S FEDERAL GROSS ESTATE, PROVIDED THAT THE TOTAL VALUE OF ALL TRANSFERS FROM SUCH ESTATE TO SUCH INDIVIDUAL IS LESS THAN FIVE MILLION DOLLARS, AND PROVIDED FURTHER THAT THE VALUE OF SUCH FARMLAND AND EQUIP- MENT CONSTITUTES OVER FIFTY PERCENT OF THE TOTAL VALUE OF SUCH TRANS- FERS. FOR THE PURPOSES OF THIS PARAGRAPH, "FAMILY MEMBER" HAS THE SAME MEANING AS PROVIDED IN SECTION SIX HUNDRED FOUR OF THIS CHAPTER. (9) REDUCED BY THE VALUE OF REAL PROPERTY TRANSFERRED BY THE ESTATE OF THE DECEDENT TO AN INDIVIDUAL WHO WAS A RESIDENT OF THIS STATE ON THE DATE OF DEATH OF SUCH DECEDENT THAT WILL SERVE AS THE PRIMARY RESIDENCE OF SUCH INDIVIDUAL, PROVIDED THAT THE TOTAL VALUE OF ALL TRANSFERS FROM SUCH ESTATE TO SUCH INDIVIDUAL IS LESS THAN FIVE MILLION DOLLARS AND PROVIDED THAT THE VALUE OF SUCH REAL PROPERTY CONSTITUTES OVER FIFTY PERCENT OF THE TOTAL VALUE OF SUCH TRANSFERS; AND PROVIDED FURTHER THAT SUCH ESTATE AND SUCH INDIVIDUAL AGREE IN WRITING AT THE TIME OF TRANSFER THAT SUCH INDIVIDUAL WILL BE LIABLE FOR ANY INHERITANCE TAX IMPOSED BY SECTION SIX HUNDRED FOUR OF THIS CHAPTER ON THE TRANSFER OF SUCH PROPER- TY THAT MAY BE DEFERRED AND PAID UPON DISPOSITION OF SUCH PROPERTY AS PROVIDED IN PARAGRAPH ONE OF SUBSECTION (D) OF SUCH SECTION. (10) REDUCED BY THE VALUE OF A FAMILY-OWNED BUSINESS TRANSFERRED BY THE ESTATE OF THE DECEDENT TO AN INDIVIDUAL WHO WAS A RESIDENT OF THIS STATE ON THE DATE OF DEATH OF SUCH DECEDENT, PROVIDED THAT THE TOTAL VALUE OF ALL TRANSFERS FROM SUCH ESTATE TO SUCH INDIVIDUAL IS LESS THAN FIVE MILLION DOLLARS AND PROVIDED THAT THE VALUE OF SUCH FAMILY-OWNED BUSINESS CONSTITUTES OVER FIFTY PERCENT OF THE TOTAL VALUE OF SUCH TRANSFERS; AND PROVIDED FURTHER THAT SUCH ESTATE AND SUCH INDIVIDUAL AGREE IN WRITING AT THE TIME OF TRANSFER THAT SUCH INDIVIDUAL WILL BE LIABLE FOR ANY INHERITANCE TAX IMPOSED BY SECTION SIX HUNDRED FOUR OF THIS CHAPTER ON THE TRANSFER OF SUCH FAMILY-OWNED BUSINESS THAT MAY BE DEFERRED AND PAID UPON DISPOSITION OF SUCH BUSINESS AS PROVIDED IN PARA- GRAPH TWO OF SUBSECTION (D) OF SUCH SECTION. FOR THE PURPOSES OF THIS PARAGRAPH, THE TERM "FAMILY-OWNED BUSINESS" HAS THE SAME MEANING AS PROVIDED IN SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBSECTION (D) OF SECTION SIX HUNDRED FOUR OF THIS CHAPTER. § 8. Subsection (a) of section 955 of the tax law, as added by section 4 of part X of chapter 59 of the laws of 2014, is amended to read as follows: (a) General.--The taxable estate of a New York resident shall be his or her New York gross estate, minus the deductions allowable for deter- mining his or her federal taxable estate under the internal revenue code (whether or not a federal estate tax return is required to be filed), except to the extent that such deductions relate to real or tangible personal property sitused outside New York state, REDUCED BY THE AMOUNT OF FEDERAL ESTATE TAX IMPOSED ON THE ESTATE OF SUCH RESIDENT, PROVIDED THAT WITH RESPECT TO THE ESTATE OF A DECEDENT WHO ON THE DATE OF SUCH S. 2782 10 DECEDENT'S DEATH WAS A NOT A RESIDENT OF NEW YORK, THE NEW YORK GROSS ESTATE SHALL BE REDUCED ONLY BY AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF FEDERAL ESTATE TAX IMPOSED ON SUCH ESTATE MULTIPLIED BY A FRACTION THE NUMERATOR OF WHICH IS THE VALUE OF PROPERTY CONTAINED IN SUCH ESTATE THAT IS SUBJECT TO THE TAX IMPOSED BY SECTION NINE HUNDRED SIXTY OF THIS PART AND THE DENOMINATOR OF WHICH IS THE TOTAL VALUE OF SUCH ESTATE. § 9. The tax law is amended by adding a new article 26-A to read as follows: ARTICLE 26-A GIFT TAX SECTION 1000. DEFINITIONS. 1001. TAX IMPOSED. 1002. RATE OF TAX. 1003. ADMINISTRATION. § 1000. DEFINITIONS. (A) "TAXABLE GIFTS" MEANS THE TRANSFERS BY GIFT WHICH ARE INCLUDED IN TAXABLE GIFTS FOR FEDERAL GIFT TAX PURPOSES UNDER SECTION 2503 AND SECTIONS 2511 TO 2514, INCLUSIVE, AND SECTIONS 2516 TO 2519, INCLUSIVE, OF THE INTERNAL REVENUE CODE, LESS THE DEDUCTIONS ALLOWED IN SECTIONS 2522 TO 2524, INCLUSIVE, OF SUCH CODE. (B) (1) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH TWO OF THIS SUBSECTION, "NEW YORK TAXABLE GIFTS" MEANS TAXABLE GIFTS MADE DURING A TAXABLE YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWENTY- FOUR, THAT ARE (I) FOR RESIDENTS, TAXABLE GIFTS, WHEREVER LOCATED, EXCEPT FOR GIFTS OF REAL ESTATE OR TANGIBLE PERSONAL PROPERTY LOCATED OUTSIDE NEW YORK AND (II) FOR NONRESIDENTS OF THIS STATE, GIFTS OF REAL ESTATE OR TANGIBLE PERSONAL PROPERTY LOCATED WITHIN NEW YORK. (2) GIFTS MADE TO ANY PERSON BY THE DONOR DURING THE CALENDAR YEAR FOR WHICH A TAX IS IMPOSED ON SUCH PERSON FOR THE RECEIPT OF SUCH GIFT BY THIS STATE, ANOTHER STATE OF THE UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, OR THE DISTRICT OF COLUMBIA, INCLUDING THE TAX IMPOSED BY SECTION SIX HUNDRED FOUR-A OF THIS CHAPTER, SHALL NOT FOR THE PURPOSES OF PARAGRAPH ONE OF THIS SUBSECTION BE INCLUDED IN THE TOTAL AMOUNT OF NEW YORK TAXABLE GIFTS MADE DURING SUCH YEAR. (C) IN THE ADMINISTRATION OF THE TAX UNDER THIS ARTICLE, THE COMMIS- SIONER SHALL APPLY THE PROVISIONS OF SECTIONS 2701 TO 2704, INCLUSIVE, OF THE INTERNAL REVENUE CODE, AND THE TERM "SECRETARY OR HIS DELEGATE" AS USED IN SUCH SECTIONS MEANS THE COMMISSIONER. § 1001. TAX IMPOSED. FOR THE CALENDAR YEAR COMMENCING ON JANUARY FIRST, TWO THOUSAND TWENTY-FOUR, AND FOR EACH YEAR THEREAFTER, A TAX COMPUTED AS PROVIDED IN SECTION ONE THOUSAND TWO OF THIS ARTICLE IS HEREBY IMPOSED ON THE TRANSFER OF PROPERTY BY GIFT DURING A TAXABLE YEAR BY ANY RESIDENT OR NONRESIDENT INDIVIDUAL. § 1002. RATE OF TAX. WITH RESPECT TO NEW YORK TAXABLE GIFTS, AS DEFINED IN SECTION ONE THOUSAND OF THIS ARTICLE, MADE BY A DONOR DURING A CALENDAR YEAR COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWEN- TY-FOUR, INCLUDING THE AGGREGATE AMOUNT OF ALL NEW YORK TAXABLE GIFTS MADE BY THE DONOR DURING ALL CALENDAR YEARS COMMENCING ON OR AFTER JANU- ARY FIRST, TWO THOUSAND TWENTY-FOUR, THE TAX IMPOSED BY SECTION ONE THOUSAND ONE OF THIS ARTICLE FOR THE CALENDAR YEAR SHALL BE AT THE RATE SET FORTH IN THE FOLLOWING SCHEDULE, WITH A CREDIT ALLOWED AGAINST SUCH TAX FOR ANY TAX PREVIOUSLY PAID TO THIS STATE PURSUANT TO THIS SECTION, PROVIDED SUCH CREDIT SHALL NOT EXCEED THE AMOUNT OF TAX IMPOSED BY THIS SECTION: IF THE AMOUNT OF NEW YORK TAXABLE GIFTS IS: THE TAX IS: NOT OVER $750,000 0% OF TAXABLE GIFTS S. 2782 11 OVER $750,000 BUT NOT OVER $0 PLUS 5% OF EXCESS OVER $750,000 $1,500,000 OVER $1,500,000 BUT NOT OVER $37,500 PLUS 15% OF EXCESS OVER $3,000,000 $1,500,000 OVER $3,000,000 BUT NOT OVER $262,500 PLUS 30% OF EXCESS OVER $6,000,000 $3,000,000 OVER $6,000,000 BUT NOT OVER $1,162,500 PLUS 40% OF EXCESS $30,000,000 OVER $6,000,000 OVER $30,000,000 $10,762,500 PLUS 50% OF EXCESS OVER $30,000,000 § 1003. ADMINISTRATION. THE COMMISSIONER SHALL PROMULGATE RULES AND REGULATIONS NECESSARY AND APPROPRIATE TO EFFECTUATE THE PROVISIONS OF THIS ARTICLE, INCLUDING THE ESTABLISHMENT OF DEADLINES AND PROCEDURES FOR THE FILING OF GIFT TAX RETURNS BY ANY RESIDENT OR NONRESIDENT OF THIS STATE WHO GAVE NEW YORK TAXABLE GIFTS DURING A TAXABLE YEAR. § 10. This act shall take effect immediately.
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