You worked hard your entire life to take care of your family and achieve your financial goals. Now it’s time to plan how you will pass your legacy on to the next generation. As part of that plan, understanding the difference between inheritance tax and estate tax is crucial.
Although Nevada does not impose either tax at the state level, federal estate tax rules and the laws of other states where your high-value assets may be located can still significantly impact your family and your long-term wealth strategy.
At Mills & Anderson, we bring more than seven decades of combined legal experience to clients across Las Vegas, Clark County, and surrounding communities. You work directly with our Nevada estate planning lawyers, receiving personalized, straightforward guidance to help you protect and transfer wealth efficiently.
Contact us online or call (702) 386-0030 today for a consultation.
- What Is an Estate Tax?
- How Do Estate Taxes Work?
- Does Nevada Have an Estate Tax?
- What Is an Inheritance Tax?
- How Do Inheritance Taxes Work?
- Does Nevada Have an Inheritance Tax?
- What Is the Difference Between the Estate Tax and the Inheritance Tax?
- Frequently Asked Questions
- Build a Plan That Protects What You Have Built
What Is an Estate Tax?
An estate tax is a tax that the government charges on the transfer of the taxable estate at death before heirs receive those assets.
Your “estate” includes everything you own at the time of death, such as:
- Real estate, including primary homes and investment property;
- Brokerage and investment accounts;
- Closely held business interests;
- Retirement accounts;
- Certain life insurance proceeds; and
- Valuable personal property, such as vehicles, jewelry, art, or collections.
The government determines the estate’s tax liability based on the combined value of these assets.
How Do Estate Taxes Work?
The federal government calculates estate taxes based on the taxable value of your estate. So, how does it determine what the taxable value of your estate is?
Identifying the Gross Estate
You must first identify what property counts for estate tax purposes, known as the gross estate.
Then, you have to determine what to include in that gross estate, such as:
- Assets you own in your name,
- Your interest in jointly owned property,
- Certain gifts or transfers where you kept meaningful control or benefits,
- Life insurance proceeds in some situations, and
- Certain trust-held assets.
In general, the gross estate includes many assets you own outright at death and some assets you transferred but still controlled in certain ways.
Determining the Taxable Estate
Once you identify the gross estate, you need to determine its value, generally by using fair market value. This is the price a willing buyer would pay in an open market as of the date of death.
Finally, you subtract specific deductions to arrive at the taxable estate.
Common deductions include:
- Debts and certain administrative expenses,
- Transfers to a surviving spouse, and
- Charitable transfers.
The government then applies the federal exemption amount. Under current rules, the exemption is approximately $13.61 million per person currently (2025 tax year), but this amount can significantly change based on changes in IRS law. If the taxable estate exceeds the exemption, the federal government taxes the portion above the exemption.
Does Nevada Have an Estate Tax?
No. There is no Nevada estate tax. However, federal law does, and that law applies to people who live in Nevada.
What Is an Inheritance Tax?
An inheritance tax is a tax a state levies on a person who receives assets from a deceased individual. Unlike an estate tax, which applies to the entire estate before distribution, an inheritance tax applies separately to each recipient based on what they receive. The recipient pays the tax, rather than the estate.
How Do Inheritance Taxes Work?
If you own real estate or certain property located in another state, that state’s inheritance tax laws may apply to the transfer of those assets, rather than Nevada law. Should you own rental property, commercial real estate, or business interests outside Nevada, that state’s laws may govern taxation and administration of those assets.
When a state imposes an inheritance tax, the beneficiary, the person who receives assets, bears legal responsibility for payment.
In states that impose an inheritance tax, the amount owed may depend on the:
- Value of the inheritance,
- Beneficiary’s relationship to the deceased, and
- State’s tax rate schedule.
Some states exempt spouses and sometimes children. Other states impose higher rates on more distant relatives or unrelated beneficiaries.
Does Nevada Have an Inheritance Tax?
Since there is no estate tax in Nevada, is there an inheritance tax? Again, no. There is no Nevada inheritance tax. Nevada does not impose an inheritance tax. However, if you own property in a state that imposes inheritance tax, that state may tax the transfer of that property to your heirs.
What Is the Difference Between the Estate Tax and the Inheritance Tax?
The primary differences between estate and inheritance taxes include:
- Who pays the tax. The estate pays estate tax before distributing assets. The beneficiary pays inheritance tax after receiving assets.
- What the law measures. Estate tax applies to the total value of the estate. Inheritance tax applies to each beneficiary’s share.
- How planning strategies differ. Estate tax planning focuses on reducing the overall taxable estate. Inheritance tax planning focuses on asset location, ownership structure, and beneficiary designations.
Your estate planning lawyer can help you understand the difference between the estate tax and inheritance tax and how each might affect your specific asset profile.
Frequently Asked Questions
What Is the Main Difference Between Inheritance Tax and Estate Tax?
The primary difference between inheritance tax and estate tax is who pays it. The estate pays estate taxes before distributing assets, while the beneficiary pays inheritance tax based on the value of that individual’s share.
Does Nevada Have an Inheritance Tax?
No. Nevada does not impose an inheritance tax on residents or on property located within the state.
Does Nevada Have an Estate Tax?
No. Nevada does not have an estate tax.
Can the Federal Estate Tax Apply Even If Nevada Has No Estate Tax?
Yes. Federal estate tax applies nationwide.
Build a Plan That Protects What You Have Built
If you hold significant real estate, business interests, or investment portfolios, understanding the difference between inheritance tax and estate tax allows you to make informed decisions about preserving long-term wealth and transferring assets to your family.
At Mills & Anderson, our partners provide direct, personalized guidance grounded in honesty, integrity, and decades of combined experience. We serve clients throughout Las Vegas, Henderson, North Las Vegas, Clark County, and surrounding communities.
If you want a clear, strategic estate plan that protects your wealth and supports your family’s future, we are here to help. Reach out online or call (702) 386-0030 today.
Legal References Used to Inform This Page
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