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What Is the Difference Between Inheritance Tax and Estate Tax?

Estate tax is paid by the estate before assets are distributed. Inheritance tax is paid by the person receiving the inheritance, and only in certain jurisdictions.

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This is a foundational query users search before running tax estimates or planning beneficiary distributions.

FAQ

Who usually pays estate tax?

The estate pays estate tax before assets are distributed to heirs. Beneficiaries receive the post-tax amount.

Who pays inheritance tax?

Inheritance tax, where applicable, is generally paid by the beneficiary and often depends on relationship to the deceased and local rules.

Can a place have both taxes?

Yes. Some jurisdictions can apply estate-level taxes and beneficiary-level inheritance taxes under different thresholds and rates.

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