An estate tax or inheritance tax is a tax on the privilege of transferring property to others after a person's death. In addition to federal estate taxes, many states have their own estate taxes. Opponents of the tax (often conservatives) will use the term death tax.
The Federal and many state governments levy estate taxes in the U.S. As per legislation passed in 2001 and 2003, the federal tax is zero in 2010, and returned to 55% on sums over $2 million in 2011. There will be no tax on the first $1 million. For individuals dying in 2019, the basic exclusion amount is $11,400,000, and this amount is indexed for inflation.
Certain items are not subject to the estate tax: in addition to any amount below the minimum, funds given to charity, as well as the proceeds from a life insurance policy on a deceased are not subject to the tax. Inheritance left to a spouse is not taxed. However, gifts made after 1976 by the decedent are added to the value of the estate to determine the amount of tax. As a result, a deceased taxpayer cannot avoid the estate tax by making gifts to friends and family while he is still alive.
- ↑ 1.0 1.1 Instructions for Form 706 (08/2019). Retrieved on 2020-08-20.