What U.S. tax is imposed on estates after a person’s death?

The U.S. tax imposed on estates after a person’s death is the estate tax.

The federal estate tax is assessed on the taxable estate transferred at death, rather than directly on each beneficiary’s individual receipt. The estate can include property such as cash, securities, real estate, business interests, and certain insurance-related assets, subject to applicable valuation and deduction rules.

Federal law provides an exclusion amount, so only estates above the relevant threshold may owe federal estate tax. The threshold and tax provisions have changed repeatedly through congressional legislation. Transfers to a surviving spouse and charitable organizations can receive important deductions under federal rules.

Estate tax is often confused with inheritance tax. An estate tax is charged on the estate before distribution, while an inheritance tax is generally charged to the person receiving property. Some U.S. states have their own estate taxes, inheritance taxes, or both.