What Is the Difference Between Estate Tax and Inheritance Tax?

Estate tax and inheritance tax are both taxes that are imposed on the transfer of wealth upon the death of an individual, but they are not the same thing. Estate tax is a tax imposed on the value of the deceased person's entire estate before it is distributed to the heirs, while inheritance tax is a tax imposed on the individual heirs or beneficiaries of the estate after it has been distributed.

Estate tax is typically only imposed on estates that exceeds certain thresholds, and the rate of estate tax is usually higher than the rate of inheritance tax. The federal government imposes an estate tax on estates that exceed $11.7 million in 2021 and $11.8 million in 2022, and the tax rate ranges from 18% to 40%. Whereas, the threshold for inheritance tax varies from state to state and may be imposed on estates of any value.

Furthermore, some states in the United States have inheritance tax, but the federal government does not impose an inheritance tax. Some states impose inheritance tax on the beneficiaries of an estate, while other states impose inheritance tax on the estate itself. The rate of inheritance tax also varies from state to state and is usually based on the relationship of the beneficiary to the deceased person. For example, some states may impose a higher rate of inheritance tax on distant relatives than on immediate family members.

It's important to note that estate tax and inheritance tax are two different taxes, and the estate tax is imposed on the estate of the deceased person, while the inheritance tax is imposed on the beneficiaries of the estate. The estate tax is typically levied at a higher rate than the inheritance tax, and the threshold for estate tax is usually higher than that for inheritance tax. Visit https://inheritanceloanadvances.com/what-is-the-difference-between-estate-tax-and-inheritance-tax/ to know more.