Death duties refer to the taxes imposed on the transfer of property upon an individual’s death, commonly including estate and inheritance taxes[1]. The specific form and terminology of these taxes can vary between jurisdictions. In the United States, the term “estate tax” is typically used for federal-level taxation, while some states use “inheritance tax” to refer to taxes paid by heirs based on the value received[1][2][6].
The estate tax is levied on the total value of the deceased person’s assets before distribution to heirs. This tax is paid by the estate itself before any assets are distributed. Common assets included in an estate’s valuation are real estate, cash, securities, business interests, trusts, and life insurance proceeds[7]. In contrast, an inheritance tax is imposed on individuals who receive property or assets. The amount owed often depends on the relationship between the beneficiary and the deceased, with closer relatives usually facing lower tax rates or higher exemptions[2][3].
The federal inheritance tax in the United States was discontinued in the early 20th century, and today, inheritance taxes exist only at the state level, with significant variation in rates and exemptions[2]. The federal estate tax remains in place, applying to estates that exceed a designated value threshold, and typically involves a rate that can reach up to 40% on amounts above the exemption limit. However, most estates fall below this threshold and are not subject to the tax[7].
In the United Kingdom, death duties once referred collectively to a range of taxes levied on estates at death, such as estate duty, succession duty, and legacy duty, with significant changes implemented through the Finance Acts of 1894 and 1909[3]. Today, the main tax on death is Inheritance Tax (IHT), applied to estates exceeding £325,000, generally at a rate of 40% on the value above this threshold. Certain exemptions and reliefs apply, such as higher thresholds for those passing property to direct descendants, or reduced rates if a portion of the estate is left to charity[5].
The historical roots of death duties trace back to Ancient Rome and have shifted over centuries in both name and structure. In modern discourse, the terms “death tax” or “death duties” have often been deployed interchangeably to refer not only to estate and inheritance taxes but also to legacy and succession taxes, depending on legislative context[6].