Which U.S. law established the modern federal estate tax in 1916?

The Revenue Act of 1916 established the modern federal estate tax in the United States.

Congress passed the act during the administration of President Woodrow Wilson. It imposed a federal tax on the transfer of wealth at death and formed the foundation of the estate-tax system that later Congresses repeatedly revised. The measure also reflected a broader Progressive Era interest in taxing large concentrations of wealth.

The United States had experimented with inheritance or estate-related taxes before 1916, particularly during wartime. Those earlier measures were temporary or structured differently. The 1916 act is generally treated as the beginning of the continuing federal estate tax framework.

Estate tax and inheritance tax are not identical. An estate tax is charged on the estate before assets are distributed, while an inheritance tax is charged to recipients. The federal government uses an estate tax; some U.S. states have also imposed inheritance taxes.