inheritance tax


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Related to inheritance tax: capital gains tax, gift tax, estate tax

inheritance tax,

assessment made on the portion of an estate received by an individual; it differs from an estate tax, which is a tax levied on an entire estate before it is distributed to individuals. The inheritance tax is usually progressive and is determined by the amount of property received by the beneficiary, as well as by his or her relationship to the deceased. Strictly speaking, it is a tax on the right to receive the property; the estate tax can be characterized as a tax on the right to transmit the property. All states impose either an estate tax or an inheritance tax, some states employing both. A related federal levy is the gift tax, designed to prevent people from avoiding inheritance and estate taxes by giving away property before death.

In the United States, the federal government levied inheritance taxes during the Civil War period and again during the Spanish-American War; since 1916, however, a progressive estate tax has been imposed. The U.S. tax law of 1981 greatly reduced estate and gift taxes by raising exemptions (from $175,000 to $600,000) and lowering rates, and a 2001 law called for phasing out the federal estate tax by 2012, but that was reversed and the tax remained in place on estates worth more than $5.49 million (twice that for couples). Changes in 2017 doubled those thresholds for 2018–25.

inheritance tax

1. (in Britain) a tax introduced in 1986 to replace capital transfer tax, consisting of a percentage levied on that part of an inheritance exceeding a specified allowance, and scaled charges on gifts made within seven years of death
2. (in the US) a state tax imposed on an inheritance according to its size and the relationship of the beneficiary to the deceased
References in periodicals archive ?
And with university costs growing ever more expensive, you may be pleased to know that payments for the education of your child are also exempt from Inheritance Tax.
This is the most common way to mitigate your Inheritance Tax liability, however, each person has their own personal and financial circumstances which must be considered fully before a decision is made."
South Dakota has a special inheritance tax class for farm and forest heirs; class 6, with lower marginal rates, applies to heirs not in class 1 or 2 who engaged in business or farming with the decedent for at least 10 out of 15 years prior to death.
However, while moves are being made to manage the impact of inheritance tax, it must be noted that the latest changes are not immediate, and will be introduced in 2017 and staggered thereafter.
There is normally no inheritance tax to pay if the value of someone's estate is below a PS325,000 threshold, or if everything above this goes to a spouse, civil partner or charity.
Anything you give to children, grandchildren or others has to be a genuine gift and you have to live at least seven years afterwards for it to escape inheritance tax. This means you cannot have it back or use it once it has been given.
The personal representatives of the individual's estate must fill the relevant inheritance tax forms, disclosing their interest in the UK residential property and pay any inheritance tax if it is due.
Any money you leave to a charity, providing it is registered in the UK, will always be free from inheritance tax. The same applies to leaving money to political parties if that's your thing.
Passing your main residence onto your child or grandchild If you are bequeathing your primary residence to your children or grandchildren (including adopted children), then there is more protection from inheritance tax in the form of the 'main residence nil-rate band'.
The assets of "martyrs"--those killed in the line of duty--are not subject to any inheritance tax.