First Known Use of estate tax
Financial Definition of ESTATE TAX
What It Is
An estate tax is levied on assets inherited by the heirs to a deceased person's estate.
How It Works
The estate tax is applied differently according to U.S. Federal and state laws as well as international law. Typically, estate taxes are only levied once a certain threshold, known as the exclusion limit, has been reached.
Estate taxes are not applicable if a person bequeaths (transfers) the assets from the estate to a living spouse. This type of transfer is known as the unlimited marital deduction. However, in the event that the spouse dies, the beneficiaries may be required to pay estate taxes if the exclusion limit is exceeded.
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Why It Matters
Estate taxes, like other taxes on unearned incomes, are a source of revenue for governments that use it to finance various projects. The issue of the estate tax has become highly politicized, and it is sometimes referred to as the "death tax" by people who oppose it.
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ESTATE TAX Defined for English Language Learners
Definition of estate tax for English Language Learners
: a tax that you pay on the money and other property that comes to you because someone has died : a tax on an estate that you inherit
legal Definition of estate tax
Seen and Heard
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