Estate tax in the United States

The estate tax in the United States 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 this federal estate tax, many states have enacted similar taxes. These taxes may be termed "inheritance taxes" to the extent the tax is payable by a person who inherits money or property of a person who has died, as opposed to an estate tax, which is a levy on the estate (money and property) of a person who has died.

The estate tax is often the subject of political debate, and opponents call it the "death tax".[1] Some supporters of the tax have called it the "Paris Hilton tax".[2]

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:[3] $5,340,000 for estates of persons dying in 2014[4] and 2015,[5] $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.[6] Because of these exemptions, it is estimated that the largest 0.2% of estates in the U.S. will pay the tax.[7] 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 effected by this 2018 increase and were not liable for federal estate tax.[8]

  1. ^ "Meet Mr. Death" Archived 2011-09-16 at the Wayback Machine. Joshua Green, May 20, 2001
  2. ^ Scott Horsley, "Paris Hilton Tax' Vs. 'Death Tax': A Lesser-Known Fiscal Debate", Dec. 11, 2012, from All Things Considered, National Public Radio.
  3. ^ "Estate Tax" irs.gov, Retrieved 2011-09-29
  4. ^ Revenue Procedure 2013-35, Section 3.32, Internal Revenue Service, U.S. Dep't of the Treasury.
  5. ^ Revenue Procedure 2014-61, Section 3.33, Internal Revenue Service, U.S. Dep't of the Treasury.
  6. ^ "What's New – Estate and Gift Tax". www.irs.gov. Retrieved 2015-12-11.
  7. ^ Huang, Chye-Ching; DeBot, Brandon. "Ten Facts You Should Know About the Federal Estate Tax". Center on Budget and Policy Priorities. Retrieved 18 April 2015.
  8. ^ Heather Long, Nov. 5 2017, The Washington Post "3,200 wealthy individuals wouldn’t pay estate tax next year under GOP plan" Retrieved 30 August 2018.

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