death tax


Definition of death tax

: a tax arising on the transmission of property after the owner's death especially : estate tax

Examples of death tax in a Sentence

Recent Examples on the Web But at the state level Vermonters are considering more death tax cuts. James Freeman, WSJ, "Has Vermont Had It with Bernienomics?," 21 Feb. 2019 Then increase the death tax and get rid of every tax deduction. Andy Kessler, WSJ, "A Universally Bad Idea," 21 Oct. 2018 And our tax cut saves family, farms and ranches and small businesses from unfair estate tax, also known as the death tax. Fox News, "Jordan, Meadows ask Trump to declassify Carter Page docs," 6 Sep. 2018 The only two things certain in life are death and taxes, but the 2018 governor’s race has combined the issues into a battle over death taxes. Christopher Keating,, "Republicans Continue Campaign Against Connecticut's 'Death Tax'," 21 June 2018 Originally, coroners’ main concern was collecting death taxes. Anita Chabria, sacbee, "Will a harassment complaint against a sheriff change how California treats its dead? | The Sacramento Bee," 3 Mar. 2018 Republicans also won’t repeal the death tax, though the exemption will be doubled to about $11 million. The Editorial Board, WSJ, "A Tax Reform for Growth," 15 Dec. 2017 Most significant is the eventual repeal of the estate or death tax — a tax that applies to well under 1 percent of Americans — after six years. Russ Wiles, USA TODAY, "Tax plan from Republicans outlines 5 sweeping changes for individuals," 2 Nov. 2017 The alternative-minimum tax is zeroed out, as is the death tax. The Editorial Board, WSJ, "Tax Reform, If You Can Keep It," 27 Sep. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'death tax.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of death tax

1880, in the meaning defined above

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The first known use of death tax was in 1880

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Statistics for death tax

Last Updated

24 Jan 2020

Cite this Entry

“Death tax.” Dictionary, Merriam-Webster, Accessed 20 Feb. 2020.

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More Definitions for death tax

death tax


Financial Definition of death tax

What It Is

A death tax, also called an estate tax, is a tax assessed on all or a portion of an inherited estate. Life insurance, pensions, real estate, cars, belongings and debts are all part of one's estate. "Death tax" is generally a pejorative term.

How It Works

Death tax rates vary, and only the portion of an estate value above a certain threshold is taxed at rates as high as 50%. These "thresholds" often change yearly. Many states used to receive a portion of the estate taxes recovered by the federal government, but now many states levy their own estate taxes instead. Each state sets its own estate tax rates and exclusions.

Death taxes usually apply to assets inherited by heirs, but they usually don't apply to assets inherited by spouses. Death taxes on small businesses and farms left to heirs also face unique estate tax treatment.

Step-ups, which refer to an increase in the price at which an investment was purchased, reduce tax bills because the IRS pretends the original cost of an asset is the market value when you inherit the assets. Thus, heirs can sell those investments immediately and might pay little or no income tax.

Why It Matters

Part of estate planning is preparing for the taxes due upon one's death, and where one lives can have a significant impact on the amount of estate tax his or her heirs pay.

Death taxes are not the same as probate fees, which can also cost thousands of dollars. Settling an estate may also involve executor fees, court fees, recording fees and attorney fees. In many cases, death taxes and fees must be paid as the estate is probated, meaning that the heirs will need to come up with the money fairly immediately after a person's death. In many cases, the heirs either have to sell the assets they've inherited just to pay the taxes and fees, or they have to borrow money to do so.

Many people attempt to reduce the size of their estate while they're still alive by giving away portions of their estate. This can be done without triggering death taxes as long as the gifts are below the gift-tax exemption limit. Establishing a trust often reduces estate taxes because it allows a person to transfer legal title of his or her property to another person while he or she is still alive. It also gives the trustee (the person acting on behalf of the decedent) the authority to distribute assets immediately to the beneficiaries based on the terms of the trust. No court is involved, so there are no probate fees and no public record of the value of the estate. Many financial advisors urge clients to have trusts, especially those who live in states where probate fees are especially high or if the client owns a home or real estate. Trusts are not for everyone, however, so it is important to seek proper financial advice.

Source: Investing Answers

death tax


Legal Definition of death tax

: a tax assessed on the transfer of property (as an estate, inheritance, legacy, or succession) after the transferor's death — compare estate tax, generation-skipping transfer tax, gift tax

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