Inheritance taxes are taxes which come about upon the death of an individual.

Inheritance taxes are part of the United Gift and Estate tax system in the United States. They are taxes on an estate which is transferred from a deceased person to their living beneficiaries. Property can be transferred through a will or through the state laws of intestacy. The laws of intestacy allow property and money to be given to a deceased person’s beneficiary even if they have not made a will.

To calculate the amount of the estate tax, the government starts with the gross estate. The gross estate is considered the value of all property at the deceased’s time of death. The gross estate can also include things such as power of appointments, bank accounts, and benefits of life insurance policies. Once the value of the gross estate is calculated certain deductions can be made which will yield the total value of the taxable estate. These deductions include, funeral expenses, certain charitable contributions, and items left to the spouse. Property and certain types of trust are exempt from taxation for married descendents, as long as they are U.S. citizens.

The federal government imposes inheritance taxes, but many states also impose them. Depending on the state, they may be called inheritance taxes or estate taxes. The states of Nebraska , New Jersey , Pennsylvania , and Tennessee refer to them as Inheritance taxes, while other states such as, Missouri , Washington , Wisconsin and Wyoming consider them estate taxes.

Many states replicate federal laws, meaning they use the same regulations when determining what is taxable and what is not. For example, if an estate is exempt from taxation by the federal government, then it is also exempt by the state government. However, some states have their own independent inheritance tax laws.

Inheritance taxes often force families to sell businesses or property that have extreme sentimental value. These families may not have received any monetary benefit from their inheritance but are still required to pay large amounts of state and federal taxes, which they sometimes cannot afford. For this reason many people argue against inheritance taxes.

Other people believe inheritance taxes are important because they are essential in the system of progressive taxation. Progressive taxation is based on the principle of fairness that people with a large number of assets and income should be taxed more than those with fewer assets and less income.

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