What Are Death, Estate, and Inheritance Taxes and Who Pays Them?

Types of Federal Taxes and State Taxes Imposed After Death

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Two types of taxes can be assessed against your property when you pass away: estate taxes and inheritance taxes. The federal government imposes only an estate tax, but some states collect one or the other, and Maryland collects both.

Estate and inheritance are often referred to as death taxes. The name "death tax" was coined years ago to put a negative spin on the federal estate tax. But although they're both related to death, the inheritance tax and the estate tax are actually quite different. It's important to clearly understand what each tax is and what property it's imposed on.

Key Takeaways

  • A death tax is essentially any tax that's imposed on the transfer of property after someone's death.
  • An estate tax is a tax on your right to transfer property after your death and it can be enacted at the federal and/or state level.
  • Twelve states and the District of Columbia and impose a state estate tax as of 2022, separate from that of the federal government
  • Six states impose an inheritance tax, and one collects both an estate and inheritance tax.

What Is a Death Tax?

The phrase "death tax" is commonly used by the media to refer to an estate tax, an inheritance tax, or both. It has no legal basis, and no tax by this name actually exists.  

A death tax can be any tax that's imposed on the transfer of property after someone's death, whether it's based on the total value of the decedent's estate or the value of a single bequest.

Beneficiaries are responsible for paying the inheritance tax while estates pay the estate tax, but some estates step in to take this financial burden off their beneficiaries. They pay the inheritance tax for them. It's a personal decision, not a legislative one, and it's often provided for in a decedent's will.

What Is an Estate Tax?

An estate tax is a tax on your right to transfer property after your death. It accounts for everything you own or have a legal interest in at the date of death. This type of tax can be imposed at the state level, the federal, or both. Governments charge it on your right to transfer your property to living heirs after your death.

The District of Columbia and 12 states impose a state estate tax as of 2022 that's separate from that which is levied by the federal government: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. Delaware and New Jersey estate taxes were both eliminated as of 2018.


This tax generally isn't levied against the entire value of an estate, but only on the amount by which it exceeds certain thresholds called exemptions.

The federal estate tax exemption is $12.92 million for deaths that will occur in 2023. This is up from $12.06 million for 2022 deaths because the amount is adjusted annually for inflation. Estates can pass on property up to this value free of tax. 

Many states match this exemption, but the thresholds are far lower in some. For example, Oregon's exemption is only $1 million as of 2022.

What Is an Inheritance Tax?

The federal government doesn't impose an inheritance tax, but several states do. An inheritance tax is mandated by a state government and is assessed on individual bequests, not the value of an entire estate. It's imposed by the state in which the decedent lived or in a state where they owned property.

Six states collect an inheritance tax: Iowa, Kentucky, Nebraska, New Jersey, ​Pennsylvania, and Maryland. And Maryland also collects a state estate tax. 

Indiana had an inheritance tax, but it was repealed effective Jan. 1, 2013. Iowa has enacted legislation to repeal its inheritance tax effective Jan. 1, 2025.

Frequently Asked Questions (FAQs)

Is all transferred property subject to an inheritance tax in the states that impose one?

Property left to a surviving spouse is exempt from the inheritance tax in all six states that impose this tax, but not all of these states exempt transfers to direct descendants. The tax is paid by the beneficiaries based on a percentage of the value of their inheritance.

Can the same asset be subject to both death taxes?

An asset would only be subject to both an estate tax and an inheritance tax if the value of the entire estate exceeded either (or both) the state and/or federal exemption amount and the bequest was subject to the state inheritance tax.

NOTE: State and federal laws change frequently, and this information may not reflect recent changes. For current tax advice, please consult with an accountant or an attorney. The information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.

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  1. Tax Foundation. "Does Your State Have an Estate or Inheritance Tax?"

  2. Delaware General Assembly. “Chapter 52, Formerly House Bill No. 16 as Amended by House Amendment No. 1.”

  3. State of New Jersey. “Inheritance and Estate Tax.”

  4. IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2023."

  5. Oregon.gov. “Estate Transfer Tax or Inheritance Tax?

  6. Indiana Department of Revenue. “For Individuals Dying After Dec. 31, 2012, No Inheritance Tax Has To Be Paid.”

  7. Iowa Legislature. "Senate File 619." Page 5.

  8. Tax Policy Center. “How Do State Estate and Inheritance Taxes Work?

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