Opponents of the federal estate tax began using the term 'death tax' in the 1940s to sway public opinion.

Historically, only about 1% to 2% of Americans had to pay the federal estate tax

Recent IRS data shows that between 2011-16, that number dropped even lower: The federal estate tax only impacts about 0.2% of Americans. Death taxes typically only impact the rich, and the federal estate tax is no exception.

The debate over estate taxes centers on wealth inequality

Since the modern federal estate tax was implemented, people have felt strongly about whether or not to keep it. Much of the debate boils down to equality: Proponents say the tax creates better income equality between the rich and poor, while opponents say it's an inequitable tax only placed on the wealthy.

Death taxes are placed on a deceased person's estate

Death taxes can include liquid cash, property, stocks, or other financial assets they owned. There are two main types of death taxes in the US: the estate tax and inheritance tax. Death taxes are levied at the federal and state level, but are targeted towards the rich.

Death taxes have helped fund wars since the 1860s

Death taxes date back to 700 BCE and were used in Ancient Rome and Ancient Egypt. In the US, they've been used to finance wars since the Civil War, and have been levied on both the estate and beneficiary. The estate tax created during WWI to help finance war efforts is still in effect today.

If the estate tax is repealed, more expensive alternatives might come in its place

The federal estate tax has been up for political debate for decades. Many want to get rid of it altogether. If repealed other tax options, like capital gains taxes, could have people paying more in taxes than before.

See how the federal estate tax has changed in the 21st century

In 2001, the government passed an act to completely repeal the tax. It was overturned in 2010. In 2017, the government increased the exemption threshold so fewer people would have to pay into the tax. In 2025, the exemption threshold was permanently set to $15M.

Half of the richest people in the US are finding ways around death taxes

One of the main purposes of the federal estate tax is to crack down on generational wealth, so wealth isn't concentrated among a select few. However, the ultra-rich have found ways around paying these taxes. This ProPublica article investigates the practices used by half of the 100 richest people in the US to avoid death taxes.

Estate taxes are paid out of the estate, while inheritance taxes are paid by beneficiaries

When a person dies, any estate taxes owed are paid out of their finances before being transferred to their beneficiaries—unlike inheritance taxes that are paid by the beneficiaries themselves. In addition to a federal estate tax, 12 states and the District of Columbia have a state estate tax with varying rates.

How much tax you would owe on a $14M inheritance

“Death taxes” refer to estate and inheritance taxes—fees imposed on wealth transfers after someone passes. While the federal estate tax only applies to estates over $13.61 million in 2024, some states, like Washington, have their own taxes.

More than 15 states have estate or inheritance taxes—but Maryland is the only state with both

Eighteen states, and Washington, DC, have estate or inheritance taxes in place. Tax rates and thresholds vary per state, but most are less than the federal estate tax rate and threshold. This means an estate doesn't have to be as lucrative to be subjected to the taxes.

Only 5 states have inheritance taxes

Unlike estate taxes, inheritance taxes paid by the beneficiary of the estate (the person who inherits the deceased person's financial assets). The federal government doesn't levy an inheritance tax, but five states do. They all have varying tax rates and rules.

How the wealthy are preparing for an estate tax clip

In 2017, the federal government passed a tax bill that raised the estate tax threshold for individuals and married couples. However, this exemption was temporary and is set to expire at the end of 2025. This Bloomberg Tax podcast episode explains what wealthy individuals are doing to protect their estates before the tax change. Listen here.

The US officially adopted an income tax in 1913

The US first levied income taxes during the Civil War, but modern income taxes became an American fixture in 1913. Two years earlier, Congress passed the 16th Amendment to give the government the right to tax individuals' and businesses' income. The US still technically levies the same federal income tax now as it did then—though it's evolved.

Over a century ago, fewer than 1% of Americans paid income taxes—but the cost of World War II prompted the federal government to greatly expand the number of people required to pay income taxes.

Trusts offer ways to reduce the taxes beneficiaries pay on assets in one’s estate

People of different socioeconomic classes often decide to establish a trust to avoid certain taxes. When someone dies and leaves assets to beneficiaries in a will, those beneficiaries must pay specific taxes a trust's beneficiaries avoid. It all depends on the type of trust.

Gifting money is one way to avoid death taxes

Gifting money while you're alive is one way people avoid estate and inheritance taxes. There is a yearly cap on how much you can give to a person before that money is taxed—but there isn't a cap on how many people you can give money to in a year.

Certain trusts can bypass estate taxes—but the terms can't be changed

Putting money and other financial assets in an irrevocable trust is one way to avoid estate taxes. There are some cons to this trust, like the fact that you can't change the terms of the trust or assets in the trust after they're set. But a big pro is that any financial assets in an irrevocable trust aren't considered part of your estate, meaning they aren't subject to death taxes.

Capital gains taxes were first levied in the US in 1913

However, up until 1921, they were treated the same as ordinary income. Ever since then, rates have swung up and down.

80% of Americans are bothered that some wealthy people don't pay their fair share of taxes

That's according to data from Pew Research Center. While most people are primarily taxed on their wages, many people in America's 1% derive much of their income from investments instead, which are often taxed at preferential capital gains rates. This structure was shaped by a series of legislative cuts that began in earnest with the 1978 Revenue Act and the 1981 Economic Recovery Tax Act.

Some policymakers take issue with long-term capital gains being taxed at a preferential rate compared to income from paid work

The concept of taxing unrealized capital gains—when an asset’s value increases but has yet to be sold—has been increasingly debated. Other policymakers in recent years have supported lowering the highest long-term capital gains tax rate and are generally opposed to levying taxes on unrealized capital gains.

What is the unlimited marital deduction?

One big way to avoid paying several death taxes? Get married. The unlimited marital deduction allows an individual to grant all their financial assets to their spouse while they're alive or after they’ve died without having to pay the federal estate tax or gift tax. There are limitations to this rule. For instance, how it works with state death taxes. Learn more here.

More than 40 states have passed versions of the Uniform Declaration of Death Act

The 1981 model law, now enacted in most states, is the legal basis for death in the US. There have been many efforts to amend this law, citing the need for more transparency to improve trust between families and the medical profession, though none have moved forward. Alterations to the law could have implications for organ donations and removing life support.

Revocable trusts are typically subject to estate taxes

Irrevocable trusts, however, are not. Both types help beneficiaries avoid probate, the lengthy court process that administers a person’s estate upon death.

Since 1913, Americans have paid income taxes at varying rates

In the 2020s, the top marginal tax rate has floated around 37%, relatively lower than previous eras. Some have called for boosting the rate significantly to tax the highest earners.

Americans between the ages of 45 and 55 pay nearly 30% of all income taxes, paying an average tax rate of around 17%.

Americans are projected to inherit $105T over the next 30 years

Today, someone's financial standing has more to do with their families than any other outside factor. Of the more than $100T of projected inheritance, that money is concentrated among a few wealthy estates and families.

The 16th Amendment paved the way for capital gains taxes

Ratified in 1913, the 16th Amendment paved the way for a far-reaching federal income tax and supercharged the country’s coffers. Before then, the US depended on import tariffs and so-called consumption taxes to raise revenue.

On July 1, 1862, the agency now known as the Internal Revenue Service was established and named the Bureau of Internal Revenue

It was created to collect the first-ever US income tax, which was created to help pay for the Civil War. After gaining their independence from Britain, Americans were skeptical about giving the federal government absolute power to collect federal income taxes. As a result, early US tax laws dictated that direct taxes, like income taxes, had to be directly apportioned to a state's population. The nation went back and forth on its federal tax laws multiple times. For instance, in 1872, the income tax from the Civil War was repealed. But it was revived in 1894, and then repealed again in 1895. In 1913, Congress passed the 16th Amendment, giving Congress the power to levy income taxes on individuals and corporations without apportioning the burden among the states in line with population, once and for all.

Before the 16th Amendment, US tax law required direct taxes to be directly apportioned to a state's population

Due to these requirements, the federal government could not impose many direct taxes. Direct taxes include property and income taxes, whereas indirect taxes include duties and excises.

Learn about loopholes in the American tax code, which involve everything from cat food to death to heavy machinery.

How the federal income tax affected Prohibition

In the early 1900s, 30% to 40% of government tax revenue came from liquor, wine, and beer, a reliance that made Prohibition seem like a fiscal impossibility. But the passage of the federal income tax in 1913 changed the calculus, which helped allow the government to ban alcohol production and sales.

Tariffs once fueled the US economy, historically serving as a primary source of revenue and a means to protect domestic industries.

Why do long-term capital gains get taxed at preferential rates?

The 1920s defined capital gains as “unearned” taxable income—as opposed to “earned” income from jobs—and set into practice preferential tax rates for long-term capital gains that are hotly debated to this day. This historical review explores how voices in favor of preferential rates were arguing on behalf of greater market liquidity and incentive for investment activity. Learn more about the real history of capital gains tax rates here.

Read why some states are considering imposing a flat tax rate that isn't adjusted by income

Wisconsin was the first US state to impose a state income tax, close in time to when the federal income tax went into effect. Many states followed suit, but nine states to this day still don't levy wage-related taxes.

Understanding the low corporate tax rate in the US

Corporate taxes, which make up roughly a third of the federal government's revenue, have been calculated using a flat 21% rate since the Tax Cuts & Jobs Act of 2017. The current rate is considered low both by historic standards (it averaged over 50% in the 1950s and 1960s) and compared to other countries.

The .1% of Americans once controlled 7% of all US wealth. Today, they control closer to 18%.

It’s not always clear whether a will or a trust is the best for an individual estate

While trusts are typically more expensive to set up than a will, they also help beneficiaries avoid specific types of taxes, depending on the type of trust. Wills typically go through probate, whereas trusts do not. An article offers a list of questions to consider when deciding between the two.

Tax policy can have a direct impact on the national debt, with past presidents' changes to tax codes inflating the deficit.

Individual income taxes are the federal government's primary revenue source, see a tracker that breaks down where the rest of the budget comes from

The US government historically makes nearly half of its total revenue last year from individual income taxes. But the US makes also makes money from a variety of other sources, including Medicare taxes and corporate income taxes. However, the federal government has run a deficit since 2001—reaching a peak of $3.13T in 2020.

The most taxed states in America

Some states in the US have higher taxes than others. Hawaii, for instance, has the highest total tax burden in the country at 13.9%, whereas Alaska has the lowest overall tax burden at 4.9%. New York has the highest individual income tax burden; and eight states have no individual income tax. See a map of the most-taxed US states here.

The US has carried debt since 1791

After the Revolutionary War, the US owed $75M to nations like France. Debt builds when spending exceeds revenue, funding programs, wars, and economic recovery efforts. Most debt is domestic, like Social Security bonds, with foreign nations also holding a share.

Probate is a legal process that determines if someone’s will is valid

The executor of the will in question not only collects estate assets, but also pays outstanding taxes and more. Grantors sometimes opt for a revocable trust instead of a will so their assets avoid probate in the event of their death.

Learn how the US tax code works and why it's important

First published in 1926, the US Code is the official codification of federal statutes in the US. Title 26 of the US Code, for instance, lists all of the federal tax laws of the United States. A new edition is published every six years.

Why the rich don't pay taxes like you do

The system behind the US income tax isn't as straightforward as it looks. You earn money. Taxes get taken out. Case closed … right? Not exactly. In this episode of "1440 Explores," we break down how the US tax system actually works, from confusing deductions and misunderstood tax brackets to why the wealthiest Americans often end up paying a very different tax than everyone else.

See how income taxes in the US compare to those of other countries.

Most Americans are now dying at home, reversing 20th century trends

For most of the 21st and 20th centuries most Americans died in hospital settings. But in 2016, home-based deaths overtook hospitals; most Americans are now dying at home, likely fueled by individual preferences to die at home or to receive at-home palliative care.

ETFs were first created as an alternative to mutual funds, combining the diversification benefits of a mutual fund with the ability to trade throughout the day on a stock exchange.

In 1931-32, JP Morgan Jr. paid no income taxes due to his company’s losses

This legally reduced his taxable income under existing laws. Similarly, the Rockefellers leveraged charitable foundations to minimize taxes, allowing them to preserve wealth while directing funds to their preferred causes.

Hawaii and New York have the highest tax burdens out of all US states, both exceeding 12% of income

The term "tax burden" in this case refers to property, income, sales, and excise taxes as a share of total personal income. Alaska and New Hampshire have the lowest total tax burdens in the US, both falling below 6%.

Most Americans take the standard tax deduction

A tax deductible is an expense that a taxpayer or business can subtract from adjusted gross income, reducing their taxable income and therefore reducing the amount of taxes owed. Governments often use tax deductibles as a way to reward people who do things that are considered beneficial to society, like charitable donations.