Inheritance Tax

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DEFINITION of 'Inheritance Tax'

In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.

Inheritance tax is known in some countries as a "death duty" and is occasionally called "the last twist of the taxman's knife".

BREAKING DOWN 'Inheritance Tax'

Inheritance tax is not the same as estate tax, which is imposed on the total value of a person's estate when that person dies. Rather, inheritance tax is imposed on the property that is passed to an heir.

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