An estate tax is levied on property that is transferred after death. Most people do fall below the $11.58 million minimum (doubled for a married couple if their plan is properly structured) requirement to be subject to estate tax, but it can be a substantial loss (at the top marginal estate tax rate of 40% of each dollar over this threshold) for those who have assets in excess of that minimum. Typically, assets in an estate are taxed at their fair market value rather than the amount paid for them by the owner. Additional state taxes could also apply in addition to the federal estate tax as certain states have a state level estate tax.
An inheritance tax, on the other hand, is collected from people who receive an inheritance. It only applies in a handful of states, but some states have both an estate tax and an inheritance tax leading to a tax both from the grantor and the inheritor of the estate.
