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

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.

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.

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.

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.

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

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.

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.

If the estate tax is repealed, more expensive alternatives might come in its place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

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.

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.

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.

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.

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

Roughly 90% of generational wealth dries up by the third generation, epitomized by the phrase 'shirtsleeves to shirtsleeves in three generations.'

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.

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.

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.

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

The 'ultrawealthy' in 2026 hold $30M or more

This group of ultra-high-net-worth individuals holds more than double the assets of the top 1% of Americans (and this group holds over a third of all American wealth). These folks go beyond a well-funded retirement plan and a paid-off home common to middle-class households with investments in private equity, commercial real estate, and alternative assets like art.

Less than a third of wealth transfers to the second generation

Just 12% of family wealth reaches the third generation, and 3% makes it to the fourth. Family offices work to prevent that kind of attrition and ensure family fortunes are passed to the next generation.

Most US billionaires made their wealth in banking and finance rather than tech

A third of US billionaires inherited much or all of their enormous fortunes. It can be tough to determine the exact net worth of billionaires given that much of their money is often tied up in company stocks, which fluctuate significantly in a given week. (Some users may experience a paywall.)

The wealthiest Americans own the vast majority of the stock market

Recent data from the Federal Reserve shows that the richest people in America own 93% of all the country's stock—the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks.

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.

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.

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.

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

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.

History’s largest intergenerational wealth transfer is happening in the next few decades

The founder of a multifamily office firm offers lessons on how to preserve wealth for generations from a global perspective, like educating younger family members.

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.

Watch this video to learn how US tax brackets actually work.

The countries with the highest wealth per person, ranked

When looking at countries with the highest average wealth per person, the United States comes in at number three (with $564,862 per person). But the US doesn't even make the top 10 when looking at the median wealth per person rather than the average, which is perhaps a more accurate version of the data. Explore the numbers here.

Who owns America's wealth?

This visualization breaks down the total net worth of all US households by wealth percentile, listing the number of households in each percentile. As you'll see in the graphic, the total net worth of all US households is close to $160T, and the richer half of the country owns roughly 98% of it. Check out the visual here.

America’s richest families

You could probably name a few of America's richest people, like Elon Musk or Mark Zuckerberg, for instance. But could you name the richest families in America, like the Waltons or the Mars family? Explore the list of 2024's richest families in America—and find out how they made their money—here.

The wealthiest person in every US state in 2021

Alongside Elon Musk and Jeff Bezos, who are the richest people in the U.S.? This map reveals the wealthiest billionaire in each U.S. state.

More than half of today's family offices—the private companies that help ultrawealthy individuals manage their fortunes—were incorporated after 2010.

Warren Buffett paid a lower effective tax rate than his secretary

While wages and salaries are taxed progressively at rates up to 37%, long-term investments are taxed at lower rates: 0%, 15%, or 20%. For wealthy individuals like Buffett, whose income mainly comes from investments, this means paying a lower effective tax rate than someone earning a salary.

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

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.

What America's 1% pays in taxes, by state

In the US, the top 1% of earners contribute 45% of all personal income taxes collected nationwide. But not all states are created equal when it comes to income tax. Some states are more dependent on the 1% than others for tax revenue. SmartAsset recently examined IRS tax return data to determine exactly how much the top 1% of earners in each state paid in taxes. Find your state here.

A 1993 deal with the government exempts British Royals from paying inheritance taxes

When Queen Elizabeth II died, King Charles didn't have to pay any inheritance taxes on the money he received from his mother. That's because of a unique deal the royals made with the UK government in the 1990s, in an effort to preserve the assets of the royal family that are synonymous with the institution.

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.

A group of billionaires and millionaires wants to pay more taxes

Hundreds of billionaires and millionaires have signed a letter called “Proud to Pay More,” in which they ask world leaders to tax the wealthiest individuals more than they currently do. The group, which includes Disney heir Abigail Disney and Valerie Rockefeller, re-upped their call at the World Economic Forum in Davos this year. Learn about the “Proud to Pay More” letter in this article.

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.

Even high earners are living paycheck to paycheck

While roughly 14% of American households make $200K or more per year, many of them still don't feel rich. For instance, more than 60% of people with salaries over $300K per year still struggle with credit card debt.

About one dollar in every six that are owed to the federal government aren't paid each year

That adds up to close to $1T in what's known as the "tax gap." Read a breakdown on the main drivers of tax evasion (distinct from legal tax avoidance) in the US.

Why the US can’t end poverty

Despite being among the wealthiest nations in the world in terms of GDP, the US has a major poverty issue, with more than 37 million Americans living in poverty as of 2023. Part of the issue is that the standards by which the US measures poverty are outdated: The official poverty measure in the US today is based on calculations from the 1960s. Find out more in this video.

The United States currently ranks number one for countries that enable the most financial secrecy

Financial secrecy refers to complex systems that make it easy for people and companies to hide assets. High levels of financial secrecy are associated with illegal activity, like drug trafficking and money laundering. Lax regulations around reporting who owns trusts, real estate, and businesses impact the United States' global financial secrecy ranking.

How popular are America's billionaires?

The US has more billionaires than any other country, and they are a mix of media moguls, entrepreneurs, and entertainers. This list ranks the 10 richest Americans by their popularity. The oracle of Omaha, Warren Buffett, ranks highest in favorability at 52%, while Google cofounder Sergey Brin ranks lowest—likely because 72% of respondents didn't recognize his name.

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.