The estate pays estate tax before assets are distributed, while inheritance tax is paid by the beneficiaries who receive the ...

An inheritance tax is levied when a beneficiary inherits assets from the estate of someone who died. There is no federal inheritance tax, but five states currently levy this tax: Kentucky, Maryland, ...

That’s particularly true in a handful of states where an inheritance tax still applies. Unlike federal estate taxes, which affect only the ultrawealthy, these state-level taxes can hit ordinary heirs.