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If there are multiple beneficiaries, inheritance tax for each person is calculated separately and each beneficiary is responsible for paying his or her share of inheritance tax.
In the United States, out of 50 states, 10 states currently levy inheritance tax. These states are Indiana, Iowa, Kansas, Kentucky, Maryland, Nebraska, New Jersey, Oregon, Pennsylvania and Tennessee. Each state has its own percentage when it comes to inheritance tax.
History of inheritance tax dates back to the American Civil War era. During the War, the Congress created a wealth transfer tax with the enactment of an inheritance tax. However, after the War was over, the tax was repealed. In 1916, inheritance tax and wealth tax was reintroduced when the Congress passed the estate tax with rates ranging from 1 percent to 10 percent.
Inheritance tax is even prevalent today and there are many exemptions and exceptions to the tax. Beneficiaries are divided into classes with Class A being blood relatives, who are either exempt or are taxed at the lowest rate. This class includes spouse, children and adoptive family. Class B beneficiaries are brothers, sisters, daughter-in-laws and son-in-laws. Class C includes everyone else. The more distant a relative the higher is the inheritance tax and lower is the tax exemption.
Depending on the state of domicile, the tax rate is imposed and inheritance tax is dependent on the value of the asset and property and the classification of the beneficiaries. A property or asset under $2 million is exempt from inheritance tax.
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