The estate pays estate tax before assets are distributed, while inheritance tax is paid by the beneficiaries who receive the ...

An inheritance can add to your finances, but taxes may reduce the amount that reaches you. Some states tax beneficiaries directly, while separate estate taxes may apply before assets are distributed.

An inheritance tax is levied when a beneficiary inherits assets from the estate of someone who died. There is no federal inheritance tax, but five states currently levy this tax: Kentucky, Maryland, ...

That’s particularly true in a handful of states where an inheritance tax still applies. Unlike federal estate taxes, which affect only the ultrawealthy, these state-level taxes can hit ordinary heirs.