Estate Tax FAQs What assets are subject to estate taxes? Generally, the types of assets subject to estate tax include real estate, financial accounts such as stocks and bonds, business interests, life insurance policies, jewelry, and certain personal, tangible items such as artwork and cars. What is the difference between an estate tax and an inheritance tax? Estate tax is imposed on a deceased individual's assets before the disbursement of funds to their intended heirs. In contrast, the inheritance tax is imposed on the heirs after they have already obtained the assets or funds. What is the estate tax rate? In 2025, the federal estate tax exemption is $13.99 million ($13.61 million in 2024) per individual. Any amounts above this threshold will be subject to tax at a rate of 18% to 40% depending on the total value that exceeds the exemption limit. There may also be additional state-level taxes imposed in certain jurisdictions. How can you reduce your estate taxes? Strategies for reducing estate taxes include establishing an Intentionally Defective Grantor Trust (IDGT), owning a life insurance policy, and creating an Irrevocable Life Insurance Trust. These approaches can help transfer assets out of your estate and provide control over them while potentially reducing estate taxes. Who pays U.S. estate tax? The estate of a deceased person typically pays the U.S. estate tax before any assets are distributed to their heirs. The estate tax computation is based on the estate's value at the time of the person's death. About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.