The value of an individual's benefits received from a deceased person's estate is used to compute inheritance tax. The recipients are responsible for paying this tax, though a will may stipulate that the estate bears some of the burdens.
Only six states have an inheritance tax, and the federal government does not levy one. As of 2021, Maryland holds the dubious distinction of being the only state to levy both an estate and an inheritance tax. The other five states have an inheritance tax.
In all six states that collect inheritance taxes, transfers to surviving spouses are exempt. Transfers to surviving children and grandchildren are likewise exempt in some states— but property going to children and grandchildren in Nebraska and Pennsylvania is subject to the state inheritance tax.
This tax is usually imposed on more distant heirs, such as brothers, nieces, nephews, and friends, and the rate tends to rise as the degree of kinship diminishes.
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