The federal estate tax has a $13.99M exemption per individual in 2025, so it applies to a small fraction of estates. Twelve states plus DC levy their own estate taxes with much lower thresholds — Massachusetts and Oregon start at $1M.
Related terms
Step-Up in Basis
A federal tax rule (IRC §1014) that resets an inherited asset's cost basis to its fair market value on the date of the original owner's death.
Probate
The court-supervised process of validating a will, paying the deceased's debts, and transferring remaining assets to heirs.
Inheritance Tax
A state-level tax paid by the heir on the value of property received from a deceased person.