What are estate taxes levied on?

Estate taxes are levied on a person's estate or total holdings after death. This tax is assessed on the total value of an individual's assets at the time of their passing, including property, investments, bank accounts, and other significant holdings. The primary purpose of estate taxes is to tax the transfer of wealth from deceased individuals to their heirs.

This tax applies specifically to the net worth of a deceased person, and there are certain exemptions and thresholds that determine whether an estate is subject to taxation. It is distinct from income taxes, which are calculated based on earnings during a person's lifetime, or gift taxes that may be applied to transfers made while a person is alive. Therefore, it is essential to recognize that estate taxes focus uniquely on the value of what is left behind after one's death.