NASHVILLE -- Following a four-year phase out, Tennessee's inheritance tax finally expires on Jan. 1 and one advocacy group is hailing the demise of what it calls the "death tax."
"Tennessee taxpayers can finally breath a sigh of relief," said Justin Owen, head of the free-market group, the Beacon Center of Tennessee, which successfully advocated for the taxes abolishment in 2012.
Estates of persons dying after Dec. 31 -- Thursday --will no longer be subject to the tax.
In his statement Owen said that "for the first time in nearly a century, Tennessee will no longer have a death tax. Repealing the death tax was one of Beacon's greatest policy victories, and we truly appreciate the leaders across our state who we worked with to get this done."
At the time the legislation passed, Tennesseans for Fair Taxation charged it would make the state's revenue systems, heavily reliant on sales taxes, even more regressive and unfair to poorer Tennesseans who pay a larger percentage share of income on sales taxes.
The Beacon Center and other proponents, however, argued it would encourage wealthy Tennesseans to remain in the state and encourage others to move here.
In its guide to the inheritance tax, the Revenue Department describe the levy as a tax "upon the privilege of receiving property by transfer because of a decedent's death." Rates ranged from 5.5 percent to 9.5 percent depending on the size of the estate.
But over the four-year phase out, Tennessee's the exemption on estates has been raised from $1 million to $5 million.
In a November presentation to the State Funding Board, which estimates tax revenues for upcoming budgets, the General Assembly's Fiscal Review Committee staff estimated the inheritance tax brought in nearly $160 million in Fiscal Year 2011-2012.
Staff estimated it would bring in $20 million during the current fiscal year that began July 1.
Owen, meanwhile, says "Tennesseans of all economic backgrounds can now rest easy knowing that the fruits of their labor can be passed on to their loved ones rather than padding government coffers."