Estate tax in the United States

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In the United States, the estate tax is a federal tax on the transfer of the estate of a person who dies. The tax applies to property that is transferred by will or, if the person has no will, according to state laws of intestacy. Other transfers that are subject to the tax can include those made through a trust and the payment of certain life insurance benefits or financial accounts. The estate tax is part of the federal unified gift and estate tax in the United States. The other part of the system, the gift tax, applies to transfers of property during a person's life.

In addition to the federal government, 12 states tax the estate of the deceased. Six states have "inheritance taxes" levied on the person who receives money or property from the estate of the deceased.

The estate tax is periodically the subject of political debate. Recent opponents have called it the "death tax"^[1] while some supporters have called it the "Paris Hilton tax".^[2]

There are many exceptions and exemptions that reduce the number of estates with tax liability: in 2021, only 2,584 estates paid a positive federal estate tax.^[3] If an asset is left to a spouse or a federally recognized charity, the tax usually does not apply. In addition, a maximum amount, varying year by year, can be given by an individual, before and/or upon their death, without incurring federal gift or estate taxes:^[4] $5,340,000 for estates of persons dying in 2014^[5] and 2015,^[6] $5,450,000 (effectively $10.90 million per married couple, assuming the deceased spouse did not leave assets to the surviving spouse) for estates of persons dying in 2016.^[7] Because of these exemptions, it is estimated that only the largest 0.2% of estates in the U.S. will pay the tax.^[8] For 2017, the exemption increased to $5.49 million. In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. As a result, about 3,200 estates were affected by this 2018 increase and were not liable for federal estate tax.^[9]

The current individual exemption in 2024 is $13.61 million, or $27.22 million for a married couple.^[10]