Beginning January 1, 2000, New York State no longer imposes a tax on gifts (for gifts made on or after this date.

Beginning on February 1,2000, and applicable to estates of descendants who dies on or after such date, New York States estate tax is replaced with a "pickup tax" equal to the maximum credit for state death taxes which federal law allows against federal estate tax. Since the tax paid to a state reduces federal tax dollar for dollar, the pickup tax is the lowest estate tax that states can impose without increasing the total tax burden above the amount of the federal estate tax alone. The pickup tax eliminates New York State estate tax for estates exempt from federal tax (currently $675,000 and increasing to $1,000,000 in 2006).

Estates will use a new and greatly simplified two-page form, the ET-706, to compute and pay the pickup tax. Also, estates now have nine months to pay tax, compared to the former seven months.

This eliminates the fee of up to $1,000 that is imposed on estates to file a copy of the estate tax return with the Surrogate’s Court in the decedent’s county of residence.