Is inheritance tax the same thing as estate tax? Does every state impose an inheritance tax?

Individuals states control their own tax laws, and states differ on whether or not they choose to impose an inheritance tax.  Although commonly confused as being the same thing, estate tax and inheritance tax are two different and distinct taxes.  Even if an individual state chooses not to impose an inheritance tax, the federal government will still impose an estate tax on qualifying estates.  An inheritance tax relates to the amount of money an individual beneficiary receives from an estate, whereas an estate tax applies to the estate as a whole. 

The main difference between inheritance tax and estate tax is that the states impose the tax on inheritance whereas the federal government imposes the estate tax.  The issue of inheritance tax is highly controversial, and opponents of the tax often label is the “death tax” and argue that it should be eliminated.  The tax rate for estate and inheritance taxes are subject to certain exemptions depending on the size of the estate.  Amounts over the allowable exemption will be subject to the estate tax.