What is a pickup tax?

What is a pickup tax?

• A. A tax imposed on vehicles charged for pickups
• B. A tax imposed by state authorities based on the estate tax credit allowed on the federal estate tax return
• C. A municipal tax on business equipment
• D. A tax on income from capital gains

Answer: (B)

A pickup tax is a state-level estate tax that uses the federal estate tax credit allowed on the federal return to determine the state’s own tax liability. In practice, some states chose to “pick up” or mirror the federal credit when calculating their estate tax, so the amount the state collects is tied to the credit allowed against the federal estate tax. This distinguishes it from taxes on vehicles, municipal taxes on equipment, or taxes on capital gains income.

A pickup tax is a state-level estate tax that uses the federal estate tax credit allowed on the federal return to determine the state’s own tax liability. In practice, some states chose to “pick up” or mirror the federal credit when calculating their estate tax, so the amount the state collects is tied to the credit allowed against the federal estate tax. This distinguishes it from taxes on vehicles, municipal taxes on equipment, or taxes on capital gains income.